Life Science Compliance Update

July 26, 2016

CMS Hosting Special Open Door Forum on Open Payments and the 2017 Physician Fee Schedule

On August 2, 2016, at 1:30 pm EST, the Centers for Medicare & Medicaid Services (CMS) Open Payments Program will host a "Special Open Door Forum" to receive live feedback from stakeholders on the solicitation to inform future rulemaking in the proposed 2017 Physician Fee Schedule.

CMS is soliciting feedback from Open Payments stakeholders on expanding and clarifying Open Payments program requirements and is not currently under no statutory deadlines or implementation schedules that require CMS to make any changes to the current rule. However, CMS does believe stakeholder feedback is important as they continue to move forward in enhancing their system and refining their reporting requirements.

To aid stakeholders, CMS has already provided quite a lengthy list of topics on which it would like to receive comments, a summary of the proposed schedule and requested input can be found here. CMS also published a slide show of questions they will be discussing, which can be found here.

Some requested input focuses on reporting on past years:

Other requested input involves pre-vetting:

And still other input requested focuses on ownership and investment interests:

This forum and effort to receive comments is separate from the third reporting cycle, which published data on June 30, 2016. Further, this solicitation will not impact any future reporting requirements without additional rulemaking or public notice.

If you are interested in attending, you can dial in to 1 (800) 837-1935 and use Conference ID# 44678813. If you cannot attend but are still interested in submitting comments, you may submit them to by September 6, 2016.

A transcript and audio recording of this Special ODF will be posted to the Special Open Door Forum website at for downloading.

For automatic emails of Open Door Forum schedule updates (E-Mailing list subscriptions) and to view Frequently Asked Questions please visit our website at

July 25, 2016

CMS Reports $42 Billion Saved in Medicare and Medicaid

On July 20, 2016, CMS released a report that showed investments that are made in program integrity activities – such as stamping out fraud and reducing and deterring other improper payments – pay off for taxpayers and beneficiaries alike. For Fiscal Years (FY) 2013 and 2014, every dollar that was invested in CMS' Medicare program integrity efforts saved $12.40 for the Medicare program. With savings per dollar like that, Medicare and Medicaid programs have saved billions of dollars in that two-year period alone.     

The report highlights CMS' significant achievements in reducing potentially fraudulent and improper payments. CMS achieved almost $42 billion in cost savings over the aforementioned two-year period by using a multifaceted approach, ranging from provider enrollment and screening standards, to use of enforcement authorities, to use of advanced analytics, such as predictive modeling.

According to Shantanu Agrawal, M.D., Deputy Administrator and Director of the Center for Program Integrity,

CMS is dedicated to promoting better care, protecting patient safety, reducing health care costs, and providing people with access to the right care, when and where they need it.  This includes continually strengthening and improving Medicare and Medicaid programs that provide vital services to millions of Americans.  We take our responsibility to deliver better care at a better value seriously.

In collaboration with the DOJ, HHS recently announced the largest healthcare fraud takedown in its history. In that case, HHS helped to charge 301 individuals, including 61 physicians and licensed medical professionals, with allegedly participating in healthcare fraud activities, totaling $900 million in false medical billing. A large portion of the individuals charged were involved in home healthcare, psychotherapy, physical and occupational therapy, durable medical equipment services, and prescription drug services.

CMS' efforts to proactively prevent potentially fraudulent and improper payments from being made have been increasingly effective, moving efforts away from the "pay-and-chase" method of recovering payments after they had already been made. In fiscal year 2013, savings from prevention activities represented about 68 percent of total savings. In fiscal year 2014, the portion of savings from preventing potentially fraudulent and improper payments rose to nearly 74 percent. This development means that more taxpayer dollars intended to care for the beneficiaries are not being paid at all, avoiding the need to recover improperly paid amounts from health care providers and suppliers. Preliminary information from FY 2015 indicates that CMS's program integrity efforts continue to accrue savings of this magnitude and that the portion attributed to prevention continues to increase. CMS is set to release FY 2015 numbers later this year.

According to Dr. Agrawal, CMS remains committed to implementing a robust program integrity strategy to protect beneficiaries from harm and further safeguard taxpayer funds by paying only for appropriate health care items and services. CMS tries to continuously evaluate and update its program integrity strategy. They often welcome input from beneficiaries, providers, suppliers, and others to inform possible future enhancements to the program integrity strategy. CMS encourages stakeholders to reach out to CMS at 1-800-MEDICARE (1-800-633-4227) or TTY: 877-486-2048 with your thoughts or to report potentially improper billing.

July 22, 2016

CMS Considers Global Payment Budgets Similar to the Maryland All-Payer Model

Earlier this year, the Centers for Medicare and Medicaid Services (CMS) through its Innovation Center (CMMI) released a request for information (RFI) (see here) on the use of global budgets, a payment scheme that "prospectively establishes an annual budget for the health care services delivered to patients by each participating provider." Global payments are currently employed under the Maryland All-Payer Model.

CMS says that under the concept, providers could receive a prospective budget for the care of the population of a community, and "would be accountable for the total cost of care across the entire continuum of care and health outcomes for the entire population." The approach would seek to lower costs and improve quality by providing clear revenue expectations and through better care coordination.

Maryland Model

The Maryland All-Payer Model is a type of payment system that brings more incentive for healthcare providers to keep their patient base healthy, reduce hospital readmission rates, and essentially keep their consumers out of the inpatient hospital setting. An All-Payer Model also positions clinicians to invest in population health management and the prevention of disease.

Since the advent of Medicare and Medicaid, states and the federal government have struggled to operate a hospital reimbursement policy that pays reasonable prices to cover costs and a modest profit. One model is an all-payer program, where commercial and government-funded health plans are all required to pay hospitals the same price. It is similar to the system used by countries like France and Germany, and 30 years ago 10 states tried it, including Maryland, Massachusetts and New York, seeing mixed success. All but Maryland abandoned their all-payer policies in the 1980s, but Maryland has kept on.

Updated Model

CMS and the state of Maryland partnered to modernize Maryland's all-payer rate-setting system for hospital services in the hopes that it will improve patients' health and reduce costs. This initiative updated Maryland's 36-year-old Medicare waiver to allow the state to adopt new policies that reduce per capita hospital expenditures and improve health outcomes as encouraged by the Affordable Care Act.

While hospitals in Maryland have not brought down the state's total costs of care, the all-payer system seems promising enough to state and federal leaders under universal healthcare coverage. In a five-year program with Maryland and state hospitals, Medicare is expecting savings of more than $300 million and an inspiration for other states.

Under Maryland's policy, in place since the 1970s thanks to a Medicare waiver, an independent government commission sets a rate structure for each hospital that all insurers must pay.

More Model Details

  • Maryland will agree to permanently shift away from its current statutory waiver, which is based on Medicare payment per inpatient admission, in exchange for the new Innovation Center model based on Medicare per capita total hospital cost growth.
  • This model will require Maryland to generate $330 million in Medicare savings over a five year performance period, measured by comparing Maryland's Medicare per capita total hospital cost growth to the national Medicare per capita total hospital cost growth.
  • This model will require Maryland to limit its annual all-payer per capita total hospital cost growth to 3.58%, the 10-year compound annual growth rate in per capita gross state product.
  • Maryland will shift virtually all of its hospital revenue over the five-year performance period into global payment models.
  • Maryland will achieve a number of quality targets designed to promote better care, better health and lower costs. Under the model, the quality of care for Maryland residents, including Medicare, Medicaid, and CHIP beneficiaries will improve as measured by hospital quality and population health measures.
    • Readmissions:  Maryland will commit to reducing its aggregate Medicare 30-day unadjusted all-cause, all-site hospital readmission rate in Maryland to the national Medicare 30-day unadjusted all-cause, all-site readmissions rate over five years.
    • Hospital Acquired Conditions:  Maryland currently operates a program that measures 3M's 65 Potentially Preventable Conditions. Under this model, Maryland will achieve an annual aggregate reduction of 6.89% in the 65 PPCs over five years for a cumulative reduction of 30%.
    • Population Health:  Maryland will submit an annual report demonstrating its performance along various population health measures.


    • If Maryland fails during the five-year performance period of the model, Maryland hospitals will transition over two years to the national Medicare payment systems.
    • Before the start of the fourth year of the model, Maryland will develop a proposal for a new model based on a Medicare total per capita cost of care test to begin no later than after the end of the five year performance period.

Moving Forward

According to a recent Advisory Board report, as Maryland's experience with the global budget cap model evolves, the state's ability to meet the waiver's performance requirements and drive improvements in population health depends on several critical elements.

Early results, as well as conversations with provider executives, suggest that the model is progressing in the right direction. But it is essential to monitor whether the state is able to maintain the positive pace of progress seen at the outset

While Maryland's all-payer model is unique, it offers lessons for officials and providers in other states even if specific reforms differ from those implemented in Maryland. Although the model has faced some setbacks and needs for adjustment over the years, the fact that it is still in place after forty years and has largely achieved its goals is no small feat.

Certainly, some factors of success in Maryland may be difficult to replicate outside of Maryland, but many principles have broad applicability across efforts to transform payment and care delivery.


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