Life Science Compliance Update

October 26, 2016

CMS Bundled Payments for Care Improvement Evaluation Released


The first year of CMS' voluntary Bundled Payments for Care Improvement initiative has yielded a mixed bag of results, according to the program's 2016 evaluation report. “There have been modest reductions in Medicare episode payments for select clinical episode groups with isolated instances of quality declines and fewer instances of increased quality,” the CMS report said. Patrick Conway, MD, acting principal deputy administrator and chief medical officer for CMS, was optimistic about the results of the experience of participants through June 2015. In a blog post, he pointed to how “11 out of the 15 clinical episode groups analyzed showed potential savings to Medicare.” This is echoed in a recent JAMA study. But one researcher warns the program may have inadvertently encouraged unnecessary treatment, contrary to Medicare's goal of lowering overall spending through value-based care models.

Bundled Payments for Care Improvement initiative

Enthusiasm for bundled payments is high. Leading health policy experts recently called on CMS to expand its mandatory bundled payment initiative. The Bundled Payments for Care Improvement (BPCI) initiative is designed to test whether linking the payments for all providers involved in delivering an episode of care can reduce Medicare costs while maintaining or improving quality of care. The Centers for Medicare & Medicaid Services (CMS) launched the BPCI initiative under the authority of the Center for Medicare and Medicaid Innovation. BPCI Awardees, which can include hospitals, physician groups, post-acute care (PAC) providers and other entities, entered into agreements with CMS to be held accountable for total Medicare episode payments. Those agreements also specify Awardees’ choices among four payment models, 48 clinical episodes, three episode lengths and waiver options.

The BPCI initiative is designed to reward Awardees for adopting practices that reduce Medicare payments for the bundle of services in the episode relative to a target price that CMS determines based on the provider’s historical payments for the same type of episode. When Awardees’ episode payments are below the target price, they may receive net payment reconciliation amounts (NPRA), which they can keep or share with their partnering providers. When Awardees’ episode payments are above the target price, they may have to return amounts to CMS. Thus, Awardees have strong incentives to lower episode costs.

How Are They Performing?

A recent JAMA report is the largest study to date of the program. The major finding of the study is that while spending decreased in both the intervention and control populations, the decrease was significantly greater for health care organizations in the BPCI. For hospitals participating in the BPCI initiative, mean Medicare payments for the hospitalization and 90-day post-discharge period were $30,551 during the baseline period and decreased to $27,265 during the intervention period. In the comparison hospitals, mean episode payments were $30,057 at baseline and decreased to $27,938 during the intervention period. Payments declined $1166 more in the BPCI hospitals than in the comparison group. Almost all of the reduction in spending was from reduced use of institutional post-acute care.


The JAMA study does suffer from some limitations. First, these could be positive results from an early part of the initiative and thus an outlier. For instance, the greater changes in hospital characteristics for the BPCI participants between the baseline and intervention periods suggest that these hospitals were evolving differently than the comparison hospitals. Second, the quality measures were limited. Although the incentives to improve quality are strong given the high cost of complications, subsequent studies will need to confirm that beneficiaries are not harmed. A third concern is whether the design of the evaluation was sufficiently sensitive to behavioral changes that could make any apparent savings misleading.

Using a different method to study the model, researchers indicate that total spending actually decline less in the BPCI hospitals than in the comparison hospitals. In the BPCI hospitals, during the pre-intervention period, the mean number of total joint replacement episodes initiated per quarter per hospital was 61.5 and the mean total payment per episode was $30 551, for mean total payments per quarter per hospital of $1,878,887, whereas the comparable numbers in the intervention period were a mean of 64.6 episodes and mean payment per episode of $27,265, for mean total payments per quarter per hospital of $1,761,319, a mean difference of $117,568 per hospital, a 6.3% decrease.

It is thus too soon to tell whether the portion of the BPCI initiative focused on lower extremity joint replacement is actually improving care and achieving savings for the Medicare program. The launch of the Comprehensive Care for Joint Replacement initiative should therefore be seen as an important step forward.

PricewaterhouseCoopers (PwC) study

About 31% of hospitals have adopted a bundled payment program, and about 63% of those hospitals have achieved savings, according to a survey by PwC. Even so, BPCI’s varied results—and the mixed results of other alternative payment models such as accountable care organizations—could give healthcare providers pause. Health systems that succeeded in pocketing savings in the orthopedic and cardiovascular groups did so, in part, by discharging patients to less expensive clinicians, such as home health providers, compared to institutional post-acute providers. Hospitals that embrace bundled payments should ensure that they have identified appropriate post-acute provider partners, and have improved consumer outreach initiatives.

October 20, 2016

CMS Releases MA and Part D Landscape Information for 2017


On September 22, 2016, the Centers for Medicare and Medicaid Services (CMS) announced information on premiums and costs for Medicare Advantage (MA) and stand-alone prescription drug plans (PDPs) for calendar year 2017.

CMS stated that 2017 Medicare Advantage premiums will “remain stable [and even decrease] and more enrollees will have access to higher quality plans while, for the seventh straight year, enrollment is projected to increase to a new all-time high.” For calendar year 2017, CMS has estimated that the average Medicare Advantage monthly premium will decrease by roughly $1.19 (about a 4% decrease), from $32.59 to $31.40. Approximately two-thirds of Medicare Advantage enrollees will experience no premium increase. 

CMS also reports that ninety-nine percent of Medicare beneficiaries will have access to a Medicare Advantage plan in 2017 and that more of those plans will offer additional supplemental benefits, such as dental, vision, and hearing benefits.

CMS is expecting an increase in enrollment, to 18.5 million enrollees next year, an increase of sixty percent since 2010. Enrollment in Medicare Advantage plans is projected to increase to thirty-two percent of all Medicare enrollees in 2017, an increase from just twenty-four percent in 2010.

It is estimated that average premiums for the Medicare Part D prescription drug program will also remain stable, saving beneficiaries billions on prescription drugs. In July 2016, CMS announced that the average premium for a basic Medicare prescription drug plan is projected to be $34 a month in 2017. Recent projections show that access to a prescription drug plan will remain strong in 2017, with 100% access to a plan in the individual market, and improved access to employer plans. The average number of Medicare Advantage plan choices per county is relatively unchanged from 2016, and access to supplemental benefits will continue to grow.

Andy Slavitt, CMS Acting Administrator, said “Medicare Advantage and the prescription drug benefit continue to be a great option for seniors and people living with disabilities. Medicare enrollees will continue to have access to predictable premiums and high quality care.”

It is estimated that due to the Affordable Care Act, Medicare beneficiaries are seeing reduced costs through: (1) savings on covered brand-name and generic prescription drugs and (2) access to certain preventive services with no co-pay or other cost sharing. More than 11 million seniors and people with disabilities have received savings and discounts in the coverage gap, since the enactment of the Affordable Care Act.

Open Enrollment for 2017 Medicare health and drug plans starts October 15, 2016, and ends on December 7, 2016.

Information on premiums and costs of 2017 Medicare health and drug plans can be found here.

A fact sheet on Medicare Advantage and Part D can be found here.

Information on Medicare Open Enrollment, including state-by-state fact sheets, can be found here.

State-by-state information on discounts in the “donut hole” can be found here.

State-by-state information on utilization of preventive services at no cost sharing to beneficiaries in Medicare can be found here.

October 17, 2016

Long-Awaited MACRA Rule Released


On Friday, October 14, 2016, the Department of Health and Human Services (HHS) finalized its rule on the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) Quality Payment Program. MACRA replaces the Sustainable Growth Rate (SGR), and is set to equip clinicians with the tools and flexibility to provide high-quality, patient-centered care. The Obama Administration is building a system that delivers better care, where clinicians work together and have a full understanding of patient needs, Medicare pays for what works and “spends taxpayer money more wisely,” and patients are the center of care.

This final rule creates two pathways for payment, allowing physicians to pick the right pace for them to participate in the transition from a fee-for-service health care system to one that uses alternative payment models that reward quality of care over quantity of services.

According to the CMS Press Release,

The first path gives clinicians the opportunity to be paid more for better care and investments that support patients. It reduces existing requirements, while still emphasizing and rewarding quality care. In the first year, it also provides a flexible performance period, so that those who are ready can dive in immediately, but those who need more time can prepare for participation later in the year.

The second path helps clinicians go further by participating in organizations that get paid primarily for keeping people healthy. For example, they could be part of an Accountable Care Organization where clinicians come together to coordinate high-quality care for the patients they serve. When they get better health results and reduce costs for the care of their patients, the clinicians receive a portion of the savings.

Compared with the draft rule issued in April, the final rule eases the reporting burden for clinicians and triples the “low-volume” threshold dollar amount for mandating participation. Any provider who bills Medicare more than $30,000 in a year or provide care to at least 100 Medicare patients qualify for MACRA. Providers who are new to Medicare in 2017 are not required to participate next year. Providers who are ready to start collecting performance data can do so as early as January 1, 2017. However, CMS is offering providers the option to start anytime between January 1, 2017, and October 2, 2016. Data will be due to CMS by March 31, 2018, and will be used to determine payment adjustments beginning January 1, 2019.

Additionally, as noted at the American Academy of Ophthalmology (AAO) meeting in Chicago,  for the transition year of 2017, the reporting period has been shortened from a full year to ninety days, including for "Advancing Care Information" (Meaningful Use), for providers who want to be eligible to earn a bonus. The Quality Reporting burden has also been lowered from the proposed rule, from 80-90% to 50%.

The AAO meeting also discussed the importance of Clinical Practice Improvement as part of MIPS, including a wide variety of activities, such as: offering expanded evening and weekend hours; offers same- or next-day care when urgent care needed; using telehealth services; participating in Maintenance of Certification Part IV; and timely seeing new and follow-up Medicaid patients.  


Slide recreated from AAO Meeting Slideshow

Transition Period for MIPS Reporting 

The final rule confirms that there will be “transitional policies,” allowing physicians to “pick their pace” of participation for the first performance period under the MIPS program, beginning January 1, 2017. The transition period allows Medicare physicians to choose one of four reporting paths outlined below. CMS has also established a “performance threshold” of three points, allowing clinicians participating in each option to avoid a negative payment adjustment. The first two paths allow for a potential positive adjustment.

The four paths are as follows: 1) report to MIPS for either a ninety day or one year period; 2) report to MIPS for less than a year but more than ninety days and report more than one quality measure, more than one improvement activity, or more than the required measures in the advancing care information performance category; 3) report one measure in each MIPS category (besides resource use which is automatically reported); or 4) participate in an Advanced APM.

Small Practice Considerations

Some of the key finalized policies for small practices include: a low volume threshold (as noted above to be "less than or equal to $30,000 in Medicare Part B allowed charges or less than or equal to 100 Medicare patients."); and virtual groups, a MIPS reporting option where up to ten clinicians can combine reporting as one group (this will not be implemented in the transition year).

Resource Costs, Quality, and EHR

Please see the below-recreated slide from the AAO meeting for a brief synopsis of resource costs, quality, and EHR use, and how they would work in MIPS.




CME Component

Unfortunately, Continuing Medical Education (CME) was not included as a Clinical Practice Improvement Activity, as many had hoped. For transition year 2017, CMS did not feel as though they had enough data to determine which CME’s should be included, and will consider comments and other submissions for activities in future years.

In the Final Rule, CME was acknowledged on page 735,

Comment: Many commenters suggested that CMS recognize continuing medical education (CME) activities provided by national recognized accreditors, completion of other state/local licensing requirements and providing free care to those in need as improvement activities, particularly those CME activities that involve assessment and improvement of patient outcomes or care quality, best practice dissemination and aid in the application of the “three aims” (better care; healthier people and communities; smarter spending), the National Quality Standards and the CMS Quality Strategy. The commenters also recommended that inclusion of surveys or interviewing clinicians to determine if they have applied lessons learned to their practice for at least 90 days following an activity should meet compliance requirements.

Response: We appreciate the suggestions that we grant improvement activities credit for activities already certified as CME activities, however, for the transition year of the MIPS program we do not have sufficient data to identify which CMEs could be included as activities. We will consider these recommendations for additional activities in future years as part of the nomination process.

The Making of the Rule

The rule has been in the making for months, and was formed in part by “a months-long listening tour with nearly 100,000 attendees and nearly 4,000 public comments.” According the HHS, a common theme was “the need for flexibility, simplicity, and support for small practices.”

Through its outreach, HHS crafted six strategic objectives to drive continued progress and improvement: (1) to improve beneficiary outcomes and engage patients through patient-centered Advanced APM and MIPS policies; (2) to enhance clinician experience through flexible and transparent program design and interactions with easy-to-use program tools; (3) to increase the availability and adoption of robust Advanced APMs; (4) to promote program understanding and maximize participation through customized communication, education, outreach and support that meet the needs of diversity of physician practices and patients, especially the unique needs of small practices; (5) to improve data and information sharing to provide accurate, timely, and actionable feedback to clinicians and other stakeholders; and (6) to ensure operational excellence in program implementation and ongoing development.

Industry Response

Industry reactions were varied, and as more organizations have time to review the rule, it is almost certain we will hear more feedback.

The American Medical Association issued a statement,

“By announcing the ‘Pick Your Pace’ approach to give physicians greater flexibility and increased options for participating in MACRA in 2017, HHS Secretary Burwell and Acting Administrator Slavitt took a significant step last month to address AMA concerns about the original proposal. The final rule includes additional steps to help small and rural practices by raising the low volume threshold exemption, and practices of all sizes will benefit from reduced MIPS reporting requirements.

Our initial review indicates that CMS has been responsive to many of the concerns raised by the AMA, and in the days ahead, the AMA will conduct a comprehensive review of the final rule to ensure that it promotes flexibility and innovation in the delivery of care to help meet the unique needs of all patients. With the flawed Sustainable Growth Rate (SGR) formula – and its annual threat of steep payment cuts – permanently eliminated, the new law gives many physicians the opportunity to be rewarded for the improvements they make to their practices and for delivering high-quality, high-value care to Medicare patients.

The American College of Rheumatology also issued a statement on the final rule, noting,

While we have not had time to review the final rule in its entirety, we are encouraged to see that the Centers for Medicare and Medicaid Services (CMS) is listening to the concerns raised by the American College of Rheumatology (ACR) regarding the need for reporting requirements that are simple, transparent, and tenable – especially for small and rural rheumatology practices.  Giving providers the flexibility of multiple options for participation in the first and second years will help ensure a smooth transition to the new payment system, and the continued delivery of quality care to Medicare patients living with rheumatic diseases. We also appreciated the broadening of exemptions from the program, which will help to protect small practices that already struggle to keep up with administrative burdens, along with the reduction in the number of required measures to be reported.


Sylvia M. Burwell, HHS Secretary, noted, “Today, we’re proud to put into action Congress’ bipartisan vision of a Medicare program that rewards clinicians for delivering quality care to their patients. Designed with input from thousands of clinicians and patients across the country, the new Quality Payment Program will strengthen our health care system for patients, clinicians and the American taxpayer.”

According to Andy Slavitt, the Acting Administrator of the Centers for Medicare & Medicaid Services (CMS), “It’s time to modernize the Medicare physician payment system to be more streamlined and effective at supporting high-quality patient care. To be successful, we must put patients and clinicians at the center of the Quality Payment Program. A critical feature of the program will be implementing these changes at a pace and with options that clinicians choose. Today’s policies are designed to get all eligible clinicians to participate in the program, so they are set up for successful care delivery as to program matures.”

This final rule incorporates some of the input HHS has received, but they are launching a new interactive website to help clinicians understand the program and aid in their successful participation. HHS will continue to host listening and learning sessions throughout the country, and will welcome feedback from patients, caregivers, clinicians, health care professionals, Congress, and others, on how to better achieve these goals.

HHS will continue to receive feedback on the final rule with comment period and will accept comments until sixty days after the rule’s release date. Comments may be submitted electronically here.  

In the coming weeks, once we have had time to fully review the rule, we will provide an in-depth analysis.In the interim, AAO recommends that you designate a physician to oversee planning; attend Medicare physician payment reform sessions at industry events; consider EHR adoption; and plan to attend post-rule finalization webinars on implementation. 


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