Life Science Compliance Update

January 11, 2017

HHS Releases Regulations on Alternative Pay Models in Last Weeks of Current Administration

Rules

Despite Republicans’ call for a suspension on new rules, the Department of Health and Human Services (HHS) pushed regulations regarding Medicare and Medicaid alternative pay models and insurance exchange stability out the door in the final weeks of the Obama administration. It is likely that the administration wanted to put final touches on changes to demonstrations, which test pay and delivery reforms in Medicare and Medicaid. However, the next administration might undo some of the biggest demonstrations for which the Centers for Medicare & Medicaid Services (CMS) published rules in December because they apply to policies most Republicans oppose.

Alternative Payment Models

CMS in December published regulations on mandatory bundled-pay demonstrations for cardiac and joint-replacement services and announced a demonstration that pays bonuses to accountable care organizations for reducing Medicaid spending on beneficiaries enrolled in both Medicare and Medicaid.

The new APMs include three episode payment models (EPMs) for episodes of care surrounding an acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment excluding lower extremity joint replacement (SHFFT). HHS chose the AMI, CABG, and SHFFT models because the agency believes those EPMs will allow hospitals to engage in effective care redesign, by:

  • increasing post-hospitalization follow-up and medical management for patients;
  • coordinating across the inpatient and post-acute care spectrum;
  • conducting appropriate discharge planning;
  • improving adherence to treatment or drug regimens;
  • reducing readmissions and complications during the post-discharge period;
  • managing chronic diseases and conditions that may be related to the EPMs' episodes;
  • choosing the most appropriate post-acute care setting; and
  • coordinating between providers and suppliers such as hospitals, physicians, and post-acute care providers.

The EMPs will be tested for five years, with the first performance year beginning July 1, 2017.

The federal government is letting states share in Medicare savings for the first time, which offsets what states lose when CMS shares Medicaid savings with providers. That model, called the accountable care organization Track 1 +, aims to get more physicians to accept the risk of penalties for poor performance.

Insurance Exchange Stability

HHS also published regulations aimed at stabilizing the exchange-plan market. The final rule maintains several changes to the Affordable Care Act's (ACA) permanent risk adjustment program and adds a provision to reduce the statewide average premium used in the risk-transfer formula.

This final rule comes after health insurance companies across the United States requested steep premium increases time and time again, claiming that providing coverage for a sicker patient population with the implementation of the ACA has contributed to the substantial financial losses appearing in their earnings reports.

The final rule also lowers the fee for state-based exchanges seeking to use the Healthcare.gov platform to 2 percent in 2018, and dedicates 3 percent of the 3.5 percent user fee for other federally facilitated market states to education and outreach efforts. CMS also set 2018 certification deadlines for qualified health plans. The final 2018 letter to federally facilitated market issuers mostly keeps the same time-frame despite issuers' assertions that the process should be delayed until at least summer to account for uncertainty.

The current administration’s goal is for a stronger risk pool, enrolling younger – typically healthier – younger adults. These changes may be a step in that direction.

January 06, 2017

A Review of CMS' Hospital Compare Website

Hospitalcompare

As we reported, in July CMS released its first-ever hospital quality star ratings on its Hospital Compare website. The overall star ratings are based on 64 quality measures grouped under three process categories—effectiveness of care, efficient use of medical imaging, and timeliness of care—and four outcomes categories: mortality, patient experience, readmissions, and safety of care. Many of the hospitals widely considered to be the nation’s best were unable to achieve a five-star rating.

Unfairly punishes hospitals

According to a recent analysis, this star rating system rewards hospitals that serve mostly affluent patients and punishes those serving the poor. The research by Bloomberg BNA compares star ratings of hospitals, indicating a correlation between high star ratings and high household income, and a corresponding correlation between low ratings and low income.

Critics of the rating system point out that low-income patients are more likely to have difficulty accessing transportation for both routine primary care and post-discharge follow-up care. That can and does affect readmission rates, which are a key component of quality ratings. Critics of the system also point to anomalous results such as the consistently low ratings of academic medical centers, which are generally considered among the nation’s best hospitals and which are often located in low income urban areas. 

As published by Bloomberg BNA:

Bloom

 

Bloom2

Outcome reporting issue

As reported in Health Affairs, CMS calculated and published star ratings for hospitals that had sufficient data to report on as few as three quality domains, including some hospitals that only had data from one clinical outcome domain. The fewer the clinical outcome domains a hospital reports, the less that hospital’s overall star rating is actually tied to performance on patient outcomes. Based on the July 2016 release of hospital compare data, 40 percent of the 102 hospitals that received a five-star rating did not have the minimum data necessary to report on either mortality or readmissions. Of those, 20 performed at only the national average on patient safety. Are all the shining stars here an accurate representation of quality?

This inconsistent value matrix leads to a wide performance divide among five-star hospitals. As shown by the Health Affairs research, among the 30 five-star hospitals that had sufficient data to report only the minimum number of quality domains required—three out of a total of seven (red bars)—14 had performed higher than the national average on only one quality domain, 15 performed above average on two domains, and a single hospital excelled at those three quality domains. Hospitals that reported all seven quality domains (yellow bars), however, needed at least three quality domains with above national average performance to receive a five-star rating:

3

MedPAC: Change the program

In October, the Medicare Payment Advisory Commission (MedPAC) sent a letter to CMS raising concerns about the agency's methodology for calculating hospital quality star ratings. Specifically, MedPAC is concerned the ratings do not fully consider the intrinsic health risks that patients bring to hospitals, therefore creating an output score that is not “apples-to-apples”. For example, at one-star hospitals, an average of 78 percent of admissions were admitted through the emergency department. At five-star hospitals, only 36 of admissions were admitted through the emergency department. One-star hospitals treat a higher share of more severe cases from emergency rooms.

MedPAC is also concerned regarding overlapping quality payment and reporting programs.

The Commission asks CMS to align the star rating methodology as much as possible with existing CMS programs, like the Hospital Value-based Purchasing program, which scores hospitals on a set of quality and cost measures and redistributes payments from lower- to higher-performing hospitals. This may perhaps be the only way for CMS to save the program and correct the methodological challenges that currently call into question the utility of the hospital star ratings.

December 01, 2016

Price, Verma Picked for Top Trump Cabinet Slots

Donald-J-Trump

Ever since the election, there has been much hubbub about who President-Elect Donald Trump will choose to fill important cabinet positions in his administration. Step by step, we are slowly seeing the Cabinet be put together. Recently, Mr. Trump announced his picks for the head of Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services (HHS).

Health and Human Services

Georgia Representative Tom Price, an orthopedic surgeon, has been tapped by Mr. Trump to take the helm as Secretary of Health and Human Services. One of the main refrains we heard from Mr. Trump throughout the campaign was that he would “repeal and replace” the Affordable Care Act (ACA). While many have made similar calls, not many have actually drafted, let alone introduced, alternatives with which to “replace” the ACA.

Dr. Price has introduced bills that have offered detailed, comprehensive replacement plans in every Congress since 2009, when Democrats started their work on the ACA. During a 2009 debate, Dr. Price discussed a “stifling and oppressive federal government,” and his concerns that the ACA and other laws interferes with the ability of patients and doctors to make medical decisions.

The Empowering Patients First Act, legislation introduced by Dr. Price, would repeal the Affordable Care Act and offer age-adjusted tax credits for the purchase of individual and family health insurance policies. The bill would also create incentives for people to contribute to health savings accounts; offer grants to states to subsidize insurance for high-risk populations; allow insurers licensed in one state to sell policies to residents of others; and authorize business and professional groups to provide coverage to members through association health plans.

According to Michael C. Burgess, a Representative from Texas, believes Mr. Trump made a good choice, noting that, “the practicing physician and the patient could not have a better friend in that office than Tom Price.”  

Centers for Medicare and Medicaid Services

Reuters announced Mr. Trump’s selection for the administrator of CMS, Seema Verma, an Indiana health policy consultant. Ms. Verma would bring with her experience in implementing the ACA, working across the aisle, and working with Vice President-elect Mike Pence. She was the architect of the Healthy Indiana Plan, Indiana’s coverage expansion for low-income individuals.

The Healthy Indiana Plan is an interesting plan, as it was designed to appeal to both political parties. HIP 2.0 asks covered patients to make a small monthly payment in order to access their health insurance. If they miss a payment, it can result in a six-month lockout from insurance coverage. While those provisions are not allowed under traditional Medicaid, Indiana received a federal waiver to implement them. Now, other Republican-led states have contacted Verma’s consulting firm to help submit their own Medicaid expansion proposals to the federal government, to include more conservative provisions.

If confirmed by the senate, Ms. Verma would likely grant even more latitude to states in crafting their Medicaid programs, similar to the latitude she worked to get for Indiana.

Dr. Price and Ms. Verma still have to be confirmed by the Senate before officially taking office, but one can make some assumptions about priorities of each individual, as well as the administration overall, given their history.  

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