Life Science Compliance Update

August 31, 2016

FDA and CMS Call for Nationwide Changes


Recently, CMS Administrator Andy Slavitt and FDA Commissioner Dr. Robert Califf wrote a joint letter to Gary Beatty, Chair of the Accredited Standards Committee X12 (ASC X12), asking that the organization add unique device identifiers (UDIs) for implantable medical devices on claims form. They argue that such a move would improve post-market surveillance and provide for better value-based reimbursement based on device performance.

Manufacturers and distributors are currently implementing UDIs and electronic health records (EHRs) are being tweaked to permit providers to record UDIs, but insurance claims forms have been the holdout. Some industry representatives believe that the changes to insurance claims forms would be costly because the technology to support the changes is not there.

The joint letter addresses the group that sets standards for sharing data gathered and used by the insurance – and other – industries. ASC X12 will release the next version of the insurance claims form for public comment in December 2016. That template is set to be released in 2021. The next update is not scheduled for another ten years.

Slavitt and Califf note that UDIs in claims forms have cost benefits because they would be able to help providers and payers calculate and compare total spending and outcomes and provide better data to track manufacturer rebates owed to the payer or provider. They acknowledge that including UDI will be a complex process and will require a change in workflow and systems for providers and billing companies, but that they are committed to a plan that minimizes impact on state Medicaid agencies, health plans, small physician practices and rural hospitals.

The day after the sending letter, Andy Slavitt tweeted, reiterating his stance:

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Health and Human Services (HHS) supports the idea “if sufficient funding and resources are provided to make the necessary Medicare claims processing system changes.”

Previously, CMS pushed back against adding UDIs to claims forms because of technical hurdles and high costs involving in overhauling the form. In Spring 2015, former Medicare Administrator Marilyn Tavenner noted that putting the UDI into electronic health records or device registries kept by companies should be sufficient to promote safety.

CMS’ Office of Inspector General stated that UDIs could save the agency money and offer valuable insights into population health. Other proponents of UDIs say they could more quickly identify dangerous devices, some of which (under the current system) have not been flagged until they hurt patients.

The letter also reflects the FDA’s current push to improve device evaluation and surveillance, as outlined in an editorial co-written by Dr. Califf.  Califf notes that a “key dilemma for device regulation is how to ensure timely access while also providing evidence to guide safe and appropriate use.” Presently, when a device receives approval for the United States market, “residual uncertainty about benefit and risk is typically addressed through postmarket evaluation,” as premarket studies do not typically reflect how a device will be used in practice.

However, Califf goes on to note, “current approaches to postmarket evaluation have limitations. Even though the FDA can require device makers to perform postmarket studies, patients have few incentives to enroll in a study once a device is marketed, and many FDA-mandated postmarket studies for devices have been delayed, scaled back, or never finished.”

Califf also seems frustrated that reporting of adverse events and device malfunctions depends on clinicians identifying and reporting a possible association, and therefore, it is likely that underreporting is common.

Califf calls for a “strategic approach to linking and using clinically based data sources, such as registries, electronic health records (EHRs), and claims data,” which could potentially “reduce the burdens of obtaining appropriate evidence across the life cycle of a device.” He believes that by “leveraging clinical data and applying advanced analytics and flexible regulatory approaches tailored to the unique data needs and innovation cycles of specific device types, a more comprehensive and accurate framework could be created for assessing the risks and benefits of devices.”

August 26, 2016

Rocky Start to CMS ACO Program


Three of the 21 participants in CMS’ newest accountable care organizations program, the Next Generation ACOs, have withdrawn since the start of the year. Heritage California ACO in Northridge, Calif., River Health ACO in Harrisburg, Pa., and WakeMed Key Community Care in Raleigh, N.C. now leave the program with 18 ACOs. This model allows ACOs to assume higher risk for a promise of a higher reward than the Pioneer Model and Medicare Shared Savings Program.

Leaving New Model

The Next Generation ACO model uses a new benchmarking methodology that incorporates one year of historical costs as well as regional and national costs and an organization’s quality score. This is seen by many as an improved benchmarking methodology. As reported by Healthcare Finance, RiverHealth ACO released a statement: "While RiverHealth ACO managed the rate of increase in costs to below the national average, projections do not indicate that the ACO would be able to meet the current target set by CMS”.

Also reported, WakeMed Key Community Care also cited the difficult financial metrics. The ACO is a joint venture between WakeMed Health and Hospitals and Key IPA. WakeMed Key Community Care's Board of Managers made a business decision to withdraw from the Next Generation ACO program for 2016 after evaluating financial and operational metrics, according to the provider. "Though we were committed to the program, developments in Q1 led the board to reconsider the Next Generation participation decision," WakeMed Key Community Care said by statement according to the report.

State of other ACO Models

As reported by Leavitt Partners, the most popular of Medicare’s models, the MSSP, gained 100 new participants this year, increasing the total to 434 covering 7.7 million lives. Of those 434 MSSP ACOs, 22 have risk-bearing arrangements, including six in Track 2 and 16 in the new Track 3. Although CMS announced 100 new ACOs, the MSSP had 404 active ACOs in 2015, giving this new cohort a net increase of only 30. Eight MSSP ACOs moved to the Next Generation model and are accounted for, but further analysis will be needed in order to conclude how many ACOs merged with others vs actually leaving the program. CMS also announced that 147 MSSP ACOs chose to renew, continuing their participation in the program.

ACOs’ Future

A recent study indicates that ACOs may unintentionally create further disparities in healthcare. According to the report, physicians who participate in ACOs are more likely to practice in affluent areas. The study found an inverse relationship between ACO participation and the percentage of the population a physician served that was black, living in poverty, uninsured or disabled or had less than a high school education. This means patients who are already more vulnerable have less access to the benefits of ACOs.

Additionally, in 2015, 45% of Medicare ACOs costed more money than the government originally predicted based on historic patient costs. It was reported that 196 ACOs saved money last year, while 157 cost more than expected. Regardless, ACOs continue to be a major part of CMS’ policy agenda to move into value-based healthcare reimbursement. MACRA’s regulatory changes will encourage physicians to join ACOs, especially those with enough risk (and meeting other requirements) to be an Advanced APM. Other ACOs will attest to the new Merit-Based Incentive Payment Program (MIPS).

While until recently little has been known about the effect of Medicare ACOs on overall spending, and whether they have been able to reduce the use of high-cost care settings such as hospital stays and emergency department visits, new evidence suggests some modest gains. This is especially true when it comes to treating patients with multiple conditions who are responsible for the greatest proportion of spending.

August 23, 2016

CMS Seeking Comment on Cardiac Care Model


The Centers for Medicare & Medicaid Services recently announced a new way to pay for the care of patients who have had a heart attack or need coronary artery bypass graft surgery. CMS is seeking comment on the five-year demonstration, which would take effect July 1, 2017, in 98 randomly selected metropolitan areas.


The demonstration plan works much like the Comprehensive Care for Joint Replacement (CJR) model implemented this year. Similar to CJR, the new bundling plan would reimburse providers a set amount for an entire episode of care, from admission to 90 days after the patient is discharged. Medicare would create targets for spending, and if the total spending is less than the Medicare target, the hospitals may be eligible to receive additional payment from Medicare. If hospitals spend more than the Medicare target, they could be required to pay back Medicare for some portion of the difference. Like the CJR, the cardiac bundling plan is mandatory for hospitals in those areas.

CMS noted in the Proposed Rule that these episodes of cardiac care have been selected because, like the CJR episodes, these episodes represent high-expenditure, high-volume episodes of care for Medicare beneficiaries. However, the episodes typically result in very different patterns of care than those in the CJR. Most episodes are emergent, and not elective, and beneficiaries in these episodes commonly have chronic conditions that contribute to the initiation of the episodes and need both planned and unplanned care throughout the episode.

CMS has noted that it intends to build the Cardiac Care Model on lessons learned and comments received in the establishment of the CJR. One notable distinction is that ACOs are allowed to be collaborators under the new Cardiac Care Model, where they could not be under the CJR. CMS notes that this is due to the interest of ACOs in gainsharing during the CJR model rule making.

Move away from fee-for-service

The Cardiac Care Model confirms what many have suspected, that bundled payment and alternative payment model participation will quickly become mandatory across the industry, requiring all providers to begin to engage with the concepts of care redesign and the prospect of bearing risk. As reported by Modern Healthcare, the expansion of bundles to cardiac care is evidence that the value-based payment movement has gained substantial momentum with the government and private payers alike, said Dr. Susan Nedza, a former chief medical officer at the CMS who is now a senior vice president at MPA Healthcare Solutions. “We've often talked about a tipping point in the movement from fee-for-service to alternative payment models, and I believe today is the day,” Nedza said.

Potential pitfalls?

Joseph Burns, a Massachusetts-based independent journalist, writes that any new payment model may see unintended consequences. He cites Francois de Brantes, executive director of the consulting firm Health Care Incentives Improvement Institute and an expert on bundled payment models, who notes that it could lead some physicians to sell their practices to hospitals, contain too great of risk, and potential produce suboptimal care for patients.

By paying hospitals to lead these programs, physicians can serve only as participating providers rather than as organizers of care and as a result, physicians would have less flexibility to schedule these procedures at a less expensive facility outside the hospital. He is also concerned with the lack of appropriate mechanisms to adjust for the severity of illness, which increases the potential financial harm a hospital could face in caring for patients with highly complex illness levels. Burns writes that evidence suggests that these more complex patients thus tend to be referred to academic centers, which can be more expensive.

Reaction from medical groups

AMA President Andrew W. Gurman, M.D. supports the proposal, linking it to MACRA. Gurman’s statement reads: "In the landmark Medicare Access and CHIP Reauthorization Act (MACRA), Congress encouraged physicians to participate in alternative payment models that support their efforts to redesign the delivery of patient care in ways that improve quality and outcomes while also restraining spending growth. Under this new proposal, CMS is broadening its models so that physicians participating in its cardiac and orthopedic models will qualify as alternative payment model participants under MACRA. This is a good step and in keeping with the goals of MACRA.

Tom Nickels, the Executive Vice President Government Relations and Public Policy at the American Hospital Association is slightly less optimistic, raising concerns of the burdens created by CMS:

“[T]he proposal to bundle payments for cardiac care is the third mandatory demonstration project from CMS in a little over a year. Further, the agency is layering this new program on hospitals already working to implement the mandatory hip and knee bundled payment model. CMS also is proposing to expand and further complicate the hip and knee program less than four months after it began and before evaluating its results. CMS is putting the success of these critical programs at risk. Hospitals are under a tremendous burden to help ensure these complex models work for patients.”

"While we support the concept, it is important that bundled care models be carried out in such a way that clinicians are given the time and tools to truly impact patient care in the best ways possible," says ACC President Richard A. Chazal, MD, FACC. "Changes in payment structures in health care can pose significant challenges to clinicians and must be driven by clinical practices that improve patient outcomes. We are optimistic that CMS will listen to comments, incorporate feedback from clinicians, and provide ample time for implementation of these new payment models."


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