Life Science Compliance Update

November 15, 2017

CMS Not Moving Forward With October Update of Hospital Compare


The Centers for Medicare & Medicaid Services announced it will not update its overall hospital quality star ratings on Hospital Compare in October. “CMS decided not to proceed with the October update to continue its examination of potential changes to the Star Rating methodology based on public feedback,” the agency said. The star ratings released last December will remain on the Hospital Compare website until the next update, CMS said.

Flawed Methodology and Hospital Criticism

When the ratings were posted in July 2016, they were heavily criticized by hospital groups and the Medicare Payment Advisory Commission (MedPAC) for “flawed methodology” and not accounting for socioeconomic factors in a hospital’s patient population.

The AHA has continued to ask CMS to suspend the star ratings until the “methodology is improved” and consider scrapping the overall rating for ratings separated by topic areas like patient safety, patient experience and cardiac care. “The measures included in the ratings were never intended to create a single, representative score of hospital quality,” wrote Ashley Thompson, AHA’s senior vice president for public policy, in a September 25 letter to CMS.

AHA has been a frequent critic of the star ratings program, saying it has “significant concerns about the conceptual underpinning” of the program and is concerned about the “reliability and accuracy” of the methodology used to determine the one-to-five star rankings. In June it asked the CMS to suspend the program entirely.

In general, hospitals have never been a fan of the star ratings program. CMS issued the first results in July 2016, and only 2.2% of hospitals received the full five stars. AHA has said some hospitals have been incorrectly classified, and that the ratings themselves are too simplistic, as well as misleading and confusing for patients. They also say the program puts too much regulatory burden on hospitals.

How Current Rankings Work

Each year hospitals that bill Medicare must complete a Hospital Consumer Assessment of Healthcare Providers and Systems Survey, also known as Hospital CAHPS, a survey designed as a standardized methodology for measuring patients’ perspectives on hospital care.

The ratings are relatively new. The first star rankings appeared on in July 2016 and were updated in October. The star ratings are based on self-reported data points from each hospital encompassing 64 quality measurements in seven categories that include mortality, safety of care, readmissions, patient experience, effectiveness of care, timeliness of care and efficient use of medical imaging. CMS then uses an algorithm to assign a 1-5 star rating on about 3,700 hospitals nationwide, which consumers can view on the Hospital Compare section of

November 14, 2017

Changes to 340B Program Reduces Hospital Reimbursement for Pharmaceutical Products by 28.5%


Recently, the Centers for Medicare & Medicaid Services (CMS) issued the Calendar Year (CY) 2018 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule with comment period (CMS-1678-FC), which includes updates to the 2018 rates and quality provisions, and other policy changes. CMS adopted many policies that will support care delivery; reduce burdens for health care providers, especially in rural areas; lower beneficiary out of pocket drug costs for certain drugs; enhance the patient-doctor relationship; and promote flexibility in healthcare. This final rule puts forth a change to the reimbursement rate for Part B medicines purchased by 340B hospitals.

OPPS will adjust payment for drugs purchased through the 340B program to the average sales price (ASP) minus 22.5%, a change from the current rate of ASP plus 6% constituting a 28.5% change of reduced reimbursement for some clinics and health systems. Rural sole community hospitals, certain cancer hospitals, and children’s hospitals will, however, be exempt from the reductions. A provision of the ruling will reduce some administrative burdens that rural providers face.  

Mixed statements have been issued by the healthcare community since the release of this news. A sampling of the responses are included below.

CMS Stance

According to CMS, the rule will help lower the cost of prescription drugs for seniors and other Medicare beneficiaries by reducing the payment rate for certain Medicare Part B drugs purchased through the 340B program. The savings from this will be redistributed equally to hospitals covered under the OPPS. A provision of the OPPS will alleviate some burden rural hospitals face by placing a 2-year moratorium on the direct physician supervision requirements for rural hospitals and critical access hospitals.

Community Oncology Alliance

The Community Oncology Alliance (COA) commended CMS for the reform, saying it is good for both patients and taxpayers and represents an important first step in stopping abuse of the program by certain hospitals.

“COA strongly supports this new policy because it will reduce drug costs for seniors by an estimated $320 million on copayments for drugs in 2018 alone; help to curb outrageous abuse of the 340B program by some large hospitals; and, hopefully, start to reverse the profit incentives that dismantled our nation’s community cancer system,” the statement says.

The reform will also follow COA’s initial recommendation that CMS should allocate funds from the program to support rural hospitals and providers.

Hospital Associations

The nation’s leading hospital associations have joined together to sue CMS over the payment cuts. America’s Essential Hospitals, the American Hospital Association, and the Association of American Medical Colleges said that they believe CMS has overstepped its authority by cutting the drug payments.

“CMS’ decision in today’s rule to cut Medicare payments to hospitals for drugs covered under the 340B program will dramatically threaten access to healthcare for many patients, including uninsured and other vulnerable populations,” Tom Nickels, executive vice president of the American Hospital Association, said in a statement yesterday. “It is not based on sound policy and punishes hospitals and patients for participation in a program outside of CMS’ jurisdiction.”


PhRMA also released on statement on the news,

The announcement from the Administration regarding changes to the Hospital Outpatient Prospective Payment System aims to improve the payment policy for Part B medicines purchased by certain 340B facilities and used by Medicare beneficiaries. There is growing evidence that in certain instances Medicare is vastly over-paying for medicines used at some 340B facilities, and moreover patients are not always seeing any benefit. This rule corrects the overpayment problem, and Medicare patients will also see a reduction in their costs.

There is still more work to be done to fix the 340B program so that patients do in fact benefit and it no longer drives up health care costs. We encourage Congress and the Administration to build on this momentum and continue to push for changes to the program.

According to PhRMA, there is growing evidence that the 340B program is structured in a way that benefits hospitals at the expense of patients. With that in mind, the group created a new resource that outlines flaws with the 340B program and suggested reform.

The changes to the 340B program will begin on January 1, 2018.

November 06, 2017

CMS Releases Final Rule for Second Year of QPP - Includes PI-QI CME Improvement Activity


Last week, the Centers for Medicare & Medicaid Services (CMS) released a final rule that makes changes in the second year of the Quality Payment Program (QPP) under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), including the Merit-based Incentive Program (MIPS) and Advanced Payment Models (APMs). The second year of the QPP continues to build on transitional year 1 policies, noting that a “second year to ramp-up the program will continue to help build upon the iterative learning and development of year 1 in preparation for a robust program in year 3.”

In addition to the final rule, CMS also published an interim final rule with comment period to immediately apply an extreme and uncontrollable circumstances policy for providers that were impacted by natural disasters in the 2017 performance period.

Some of the important pieces of the interim final rule include the following:

Extreme and Uncontrollable Circumstance Policy

To account for Hurricanes Harvey, Irma, and Maria, as well as other disasters that have occurred during the 2017 MIPS performance period, CMS is establishing in an interim final rule with comment period an automatic extreme and uncontrollable circumstance policy for the quality, improvement activities, and advancing care information performance categories for the 2017 MIPS performance period.

CMS will apply the extreme and uncontrollable circumstance policies for the MIPS performance categories to individual MIPS eligible clinicians for the 2017 MIPS performance period without requiring a MIPS eligible clinician to submit an application when it determines a triggering natural disaster/event has occurred and the clinician is in an affected area.

Facility-Based Measurement

In the proposed rule, CMS outlined a proposal to implement facility-based measurement for clinicians whose primary professional responsibilities are in a healthcare facility, to assess performance in the quality and cost performance categories of MIPS based on the performance of that facility in another value-based purchasing program.

In the final rule, the agency opts to adopt this proposal in 2019 (year three of the QPP) rather than 2018 as proposed, and says it will use 2018 “to ensure that clinicians better understand the opportunity and ensure operational readiness to offer facility-based measurement.”

Complex Patient Bonus

CMS also finalizes its proposal to apply a complex patient bonus to MIPS eligible clinicians who care for complex patients while it continues to examine issues surrounding socioeconomic status adjustment. Rather than a bonus of three points as was proposed, the agency will cap the bonus at five points “in part to align with the small practice bonus.”

CMS says the bonus will be based on both average HCC risk scores and a ratio of dual eligible beneficiaries, and the final score will be compared against the MIPS performance threshold of 15 points for the 2020 MIPS payment year. “A 15-point final score equal to the performance threshold can be achieved via multiple pathways and continues the gradual transition into MIPS,” the agency writes.


CMS finalizes policies for the second year of MIPS, which include the 2018 performance period and 2020 MIPS payment year. The MIPS final score would be composed of: Quality (50 percent), Cost (10 percent), Improvement Activities (15 percent), and Advancing Care Information (25 percent). CMS also finalizes a 12-month calendar year performance period for Cost and Quality (Jan. 1, 2018 through Dec. 31, 2018), and a 90-day minimum performance period for Improvement Activities, Advancing Care Information, and Cost.

Quality Performance Category; Cost Performance Category

Deviating from the proposal that the Quality Performance category remains at 60 percent weighting of the final score, CMS finalizes a 50 percent weighting for the payment year 2020.

CMS also finalized weighting of the Cost category at 10 percent (up from a proposed zero percent).

The statutory 30 percent weight for the Cost category would apply for the 2021 payment year.

For the Cost category, CMS will continue to use the total per capita costs for all attributed beneficiaries measure and the Medicare Spending per Beneficiary (MSPB) measure during the 2018 MIPS performance period and plans to offer performance feedback on episodes. However, the agency will not use the 10 episode-based measures adopted for the 2017 MIPS performance period and will be developing new episode-based measures with stakeholder input and soliciting feedback on some of these measures fall 2018. CMS says it expects to propose new measures in future rulemakings. (p. 29).

Quality Measures Additions and Changes

As proposed, CMS adds nine new quality measures to MIPS for the 2018 performance period, including:

  • Average Change in Back Pain following Lumbar Discectomy/Laminotomy;
  • Average Change in Back Pain following Lumbar Fusion;
  • Average Change in Leg Pain following Lumbar Discectomy/Laminotomy;
  • Bone Density Evaluation for Patients with Prostate Cancer and Receiving Androgen Deprivation Therapy;
  • Prevention of Post-Operative Vomiting (POV) - Combination Therapy (Pediatrics);
  • Otitis Media with Effusion (OME): Systemic Antimicrobials-Avoidance of Inappropriate Use;
  • Uterine Artery Embolization Technique: Documentation of Angiographic Endpoints and Interrogation of Ovarian Arteries;
  • Well-Child Visits in the Third, Fourth, Fifth, and Sixth Years of Life; and
  • Developmental Screening in the First Three Years of Life.

Improvement Activities

CMS finalized that the weight of the Improvement Activities category remains at 15 percent of the final score. CMS also formalized an annual “call for activities process” for Quality Payment Program Year 3 and future years.

CMS also finalized the improvement activity for QI-PI continuing medical education program that addresses performance or quality improvement as a medium weight activity if it meets the following criteria: 

  • The activity must address a quality or safety gap that is supported by a needs assessment or problem analysis, or must support the completion of such a needs assessment as part of the activity; 
  • The activity must have specific, measurable aim(s) for improvement; 
  • The activity must include interventions intended to result in improvement;
  • The activity must include data collection and analysis of performance data to assess the impact of the interventions; and 
  • The accredited program must define meaningful clinician participation in their activity, describe the mechanism for identifying clinicians who meet the requirements and provide participant completion information. 

For 2018, CMS finalizes its proposal that at least 50 percent of the practice sites within a TIN must be recognized as a certified or recognized patient-centered medical home or comparable specialty practice to receive full credit in the improvement activities performance category. CMS will continue to seek new improvement activities as the program evolves.  

Advance Payment Models (APMs)

CMS included several proposals within the final rule and interim final rule relating to APMs. Some of them are below.

Nominal Risk Standard

An eight percent revenue-based nominal amount standard was finalized for an additional two years through PY 2020. To qualify as an Advanced APM, participating entities 1) be a Medical Home Model expanded under section 1115A(c) of MACRA; or 2) must bear risk for monetary losses of a more than “nominal” amount, which was determined to be at least eight percent of their Medicare Parts A and B revenue. The agency also finalized changes to the nominal amount standard for Medical Home Models so that the minimum required amount of total risk increases more slowly; beginning at 2.5 percent of the Parts A and B revenue in PY 2018, increasing incrementally to five percent for PY 2021 and later.

Qualifying APM Participant (QP) and Medicare QP Performance Period

A qualifying participant (QP) is an eligible clinician who has met a threshold for a certain percentage of their patients or payments through an Advanced APM. QPs who have met the threshold are excluded from MIPS for the year and receive a five percent APM Incentive Payment for each year they are QPs from 2019 through 2024.

CMS will calculate QP Threshold Scores for Advanced APMs that are actively tested continuously for a minimum of 60 days during the Medicare QP Performance Period (Jan. 1-Aug. 31). For Advanced APMs that start or end during the Medicare QP Performance Period, the threshold score will be calculated using only the dates that APM entities were able to participate in the Advanced APM per the terms of the Advanced APM, as long as they were able to participate for at least 60 continuous days during the QP performance period.

Eligible clinicians who participate in Advanced APMs but do not meet the QP or Partial QP thresholds are subject to MIPS reporting requirements and payment adjustments. CMS estimates that approximately 185,000 to 250,000 eligible clinicians may become QPs for the payment year 2020 based on Advanced APM participation in the performance year 2018.


Small Practice Considerations

CMS gave special consideration though too small practices in drafting this final rule and interim final rule. Some of the policies specifically aimed at smaller practices include the following.

Increased Low Volume Threshold

CMS increased the threshold to exclude individual MIPS eligible clinicians or groups with less than $90,000 in Part B allowed charges or less than 200 Part B beneficiaries. CMS also finalized a proposal that during the 30-day preview period, these eligible clinicians and groups will have the option to opt out of having their data publicly reported on Physician Compare.

Bonus Points  

If the eligible clinician or group submits data on at least one performance category in an applicable performance period, CMS will add five points to the final score of any eligible clinician or group who’s in a small practice.

Virtual Groups

A Virtual Group is defined as solo practitioners and groups of 10 or fewer eligible clinicians, otherwise eligible to participate in MIPS, who come together “virtually” with at least 1 other such solo practitioner or group to participate in MIPS for a performance period of a year. CMS notes that if a group of clinicians chooses to join or form a Virtual Group, all eligible clinicians under the TIN would have their performance assessed as part of the Virtual Group. The Virtual Group election process for 2018 is currently running through December 31, 2017.

Regulatory Impact Analysis

CMS estimates that 622,000 eligible clinicians will be subject to MIPS reporting requirements and payment adjustments for the 2020 payment year. About 540,000 others will be excluded for not meeting the low-volume threshold.

CMS anticipates an equal distribution of $118 million in positive and $118 million in negative adjustments to providers, as well as up to $500 million additionally available under the statute for “exceptional performance.” CMS notes that starting with “modest” payment adjustments will help the QPP start off on the right foot even if it minimizes the degree of initial incentives.

Effective Date

The provisions of this final rule with comment period and interim final rule with comment period are effective on January 1, 2018. Comments must be received no later than January 2, 2018.


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