Life Science Compliance Update

February 20, 2017

Newly Released CMS Payment Models – What is to Come?

Right before the inauguration of the new President, the Centers for Medicare & Medicaid Services (CMS) finalized new Innovation Center models. The announcement finalizes significant new policies related to: (1) cardiac care; three new payment models will support clinicians in providing care to patients who receive treatment for heart attacks, heart surgery to bypass blocked coronary arteries, or cardiac rehabilitation following a heart attack or heart surgery; (2) orthopedic care; one payment model will support clinicians in providing care to patients who receive surgery after a hip fracture, other than hip replacement; (3) CMS is finalizing updates to the Comprehensive Care for Joint Replacement Model, which began in April 2016.

CMS is also now offering an Accountable Care Organization opportunity for small practices. In the new Medicare ACO Track 1+ Model will have more limited downside risk than Tracks 2 or 3 of the Medicare Shared Savings Program in order to encourage more practices, especially small practices, to advance to performance-based risk. However, it is unclear how far these models will go as they were proposed before President Trump took office.

HHS Support and Mixed Industry Reaction

As reported by the Advisory Board, HHS said CMS offer education and training to help prepare and support providers in complying with the new payment models. CMS will offer webinars addressing each payment model and the criteria providers must meet to qualify for incentive payments under MACRA. CMS also will release fact sheets explaining how clinicians can successfully comply with the models and will host open forums where CMS staff will answer questions about the new payment models.

Industry reaction, however, was mixed. The American Medical Association (AMA) applauded the new payment models. AMA President Andrew Gurman in a statement said the group "supports CMS as it expands the models that can qualify as Advanced APMs" and "is working with the agency to expand opportunities for different specialties and practices to participate in innovative care models." He added, "We hope that CMS will continue to expand the list of Advanced APMs in the future so new delivery and payment arrangements can be supported and promoted—a win for physicians and patients alike."

In contrast, Tom Nickels, executive vice president for government relations and public policy at the American Hospital Association (AHA), in a statement said, "The bundled-payment model for cardiac care is the second mandatory demonstration project [CMS] has finalized in just the past 15 months," adding, "This is too much too soon." Nickels continued, "Regrettably, at the same time, the agency finalized its plans to expand and further complicate its existing mandatory hip and knee bundled payment model less than a year after it began, and before fully evaluating its results." He said AHA will "continue to urge that any new bundled payment programs be of a voluntary nature."

New Models

The three Episode Payment Models (EPMs) include models 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). Episodes in the new models begin with admissions for hospitalizations in inpatient hospitals, and extend 90 days post-hospital discharge. Once the models are fully in effect, participating hospitals will be paid a fixed target price for each care episode, with hospitals that deliver higher-quality care receiving a higher target price. The goal for the payment models are to improve the quality of care provided to beneficiaries in an applicable episode while reducing episode spending through financial accountability.

CMS selected the EPM episodes based on their clinical homogeneity, site-of-service, and Medical Severity Diagnosis-Related Group (MS-DRG) assignment considerations. However, the AMI, CABG, and SHFFT models differ from previous CMMI payment models in a few ways. The Lower Extremity Joint Replacement model, while the procedures are common among the Medicare population, the majority of such procedures are elective. In contrast, the patient population included in the finalized episodes are substantially different from the patient population in CJR episodes, due to the clinical nature of the cardiac and SHFFT episodes.

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 EPM episode following discharge from the initial hospitalization that begins the episode. Both the AMI and CABG model episodes primarily include beneficiaries with cardiovascular disease, a chronic condition which likely contributed to the acute events or procedures that initiate the episodes. Additionally, 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 EPM episode following discharge from the initial hospitalization that begins the episode.

Specifically, in CMS' Cardiac Rehabilitation (CR) incentive payment model, the agency will test the use of CR and intensive cardiac rehabilitation (ICR) services for beneficiaries hospitalized for treatment of an AMI or CABG for 90 days post-hospital discharge, where the beneficiary's overall care is paid under either an EPM or the Medicare Fee for Service program. CR incentive payments will be available to hospital participants in 45 geographic areas that were selected for the CABG and AMI EPMs and 45 geographic areas that were not selected for the EPM program, and it will cover the same period as the cardiac care EPMs.

Under this model, CMS will make standard Medicare payments to providers for CR/ICR services, with an additional retrospective payment to participant hospitals based on total CR service use by beneficiaries attributed to the hospital, subject to Medicare coverage limits. CMS will make an initial payment of $25 per CR/ICR service for each of the first 11 CR/ICR services paid for by Medicare during the care period; after 11 services, the per-service payment increases to $175. CMS estimates that 1,320 hospitals will participate in the CR Incentive Payment Model, and that the model's impact on Medicare spending could range between $29 million in net Medicare costs and $32 million in net Medicare savings from July 2017 through December 2024, depending on the change in utilization of CR/ICR services.

These new payment models, like the CJR model, require provider participation in selected geographic areas. The SHFFT model's 67 geographic areas are the same as the CJR's. The cardiac test is meant to apply to hospitals located in 98 metro areas of the nation, representing about a quarter of all these regions in the nation.

Existing CJR geographical areas are identified by stars:

Participant hospitals in these selected geographic areas are all acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) that are not concurrently participating in Models 2, 3, or 4 of the Innovation Center's Bundled Payment for Care Improvement (BPCI) initiative for AMI, CABG, or SHFFT episodes. Additionally, geographic areas where all-payer models under the Innovation Center are operating — Maryland and Vermont — are excluded. Hospitals paid under a reasonable cost methodology, such as critical access hospitals, also are excluded. Notably, 17 of the selected MSAs have also been selected to participate in the CJR demonstration.

Medicare ACO Track 1+ Model

In its Final Rule announcement, CMS also outlined the basic parameters of a new "Track 1+" option that it intends to offer within the MSSP program beginning in 2018. The summary indicates that CMS intends to call for applications during the regular MSSP cycle in 2017 and that Letters of Intent to Apply will be due in May 2017. The model will be open to Track One ACOs that are in the current agreement period as well as new MSSP applicants and Track One ACOs that are renewing their agreements. CMS also explains that ACOs will have the opportunity to join during the 2019 and 2020 application cycles.

The Track 1+ model is designed to qualify as an Advanced APM for purposes of QPP and incorporates downside risk at a rate significant enough to meet the nominal risk criteria but less aggressively than MSSP Tracks Two and Three. It incorporates the 50% maximum savings sharing rate included in the current Track One but also includes some benefits of Track Three, such as prospective beneficiary assignment, symmetrical savings and loss thresholds and waiver of the 3-day SNF rule.

It offers a fixed 30% loss sharing rate with a maximum loss limit at either 8 percent of ACO participant Medicare fee-for-service revenue (for ACOs that are physician-led or include small, rural hospitals); or 4 percent of the ACO's updated benchmark depending on the composition of the ACO (for other ACOs now in Track 1 or new or renewing ACOs). In later years, ACOs eligible for the lower sharing limit could opt for a higher percentage of revenue in 2019 and 2020. The CMS announcement includes few details beyond the basic parameters but indicates that additional information on the model will be forthcoming.

MACRA

With these new alternative payment models, CMS continues to shift Medicare payments from traditional fee-for-service to value-based payments. The new payment models, including the Cardiac Care Model, the Cardiac Rehabilitation Incentive Payment Model and the expanded CJR, all qualify as Advanced Alternative Payment Models under MACRA, and thus present opportunities for clinicians who collaborate with participant hospitals to qualify for a five percent incentive payment.

Will Trump Dump the Models?

As reported, President-elect Donald Trump's choice to head the US Department of Health and Human Services (HHS) doesn't like Medicare experiments in which physicians, hospitals, and patients have no choice but to participate. That means four mandatory bundled payment models just approved by the Centers for Medicare & Medicaid Services (CMS) are on a collision course with the incoming Trump administration.

As we previously described, industry reaction to the CMS proposals was mixed. However, Perhaps the most significant protest from the ranks of medicine came from Donald Trump's pick for HHS secretary, Rep. Tom Price, MD, (R-GA), an orthopedic surgeon. In a September letter to CMS, Dr. Price as lead signatory and 178 other House members said that by proposing mandatory bundled payments, the Center for Medicare and Medicaid Innovation "has upset the balance of power between the legislative and executive branches." The new models don't represent limited, low-risk tests, as envisioned by the ACA, but sweeping changes that warrant Congressional say-so, the lawmakers argued. "Medicare providers and their patients are being forced into high-risk government-dictated reforms with unknown impacts." As Secretary of HHS Dr. Price could erase or rewrite the regulations for the mandatory bundled payments. He may also make them voluntary.

July 25, 2014

Affordable Care Act: Several States Reconsidering State Exchanges – Big Name High Tech Giants Couldn’t Deliver

Even as two Federal Appeals courts spilt on the issue of tax credits for purchasers of exchanges run by the federal government, states are getting out of the business of running exchanges.

We have previously reported on the problems associated with Healthcare.gov and concerns that similar issues may arise with the CMS Open Payments website, especially given the two site's similarities. We noted that vender CGI Federal's track record should cause stakeholders to buckle up for a potentially bumpy ride, with glitches, and problems accessing information as possible concerns.

Continuing our interest in the health care exchange websites, four states—Massachusetts, Nevada, Oregon, and Maryland—scrapped their malfunctioning websites. As reported by Politico, nearly half a billion dollars in federal money has been spent developing these four state exchanges that are now in shambles, and the final price tag for salvaging them may go sharply higher.

The federal government is caught between writing still more exorbitant checks to give them a second chance at creating viable exchanges of their own or, for a lesser although not inexpensive sum, adding still more states to HealthCare.gov. The federal system is already serving 36 states, far more than originally anticipated.

As for the contractors involved, which have borne most of the blame for the exchange debacles, a few continue to insist that fixes are possible. Others are braced for possible legal action or waiting to hear if now-tainted contracts will be terminated.

The $474 million spent by these four states includes the cost that officials have publicly detailed to date. It climbs further if states like Minnesota and Hawaii, which have suffered similarly dysfunctional exchanges, are added.

Massachusetts

Massachusetts is original home of state run health exchanges and have been running a state system for years but meeting the federal mandates became for them problematic. According to The Hill: Massachusetts abandoned its website, a system so problematic that the state was forced to enroll tens of thousands of people in temporary insurance plans through Medicaid.

The plan underscores the depth of technical problems with the Massachusetts Health Connector and echoes a recent decision by Cover Oregon, another glitch-ridden marketplace, to hand federal health officials the reins to its system this month.

Massachusetts officials are pursuing what they described as a "dual-track strategy" for their insurance marketplace, combining new, off-the-shelf enrollment software with a back-up plan to shift the system into HealthCare.gov if the transition takes too long.

Nevada

The board of the Nevada health insurance exchange unanimously voted to end the state's contract with Xerox, the vendor responsible for constructing the exchange website, and instead rely on the federal government's site for the 2015 open enrollment period.

The decision comes after a series of billing, enrollment and other technological errors spurred a class-action lawsuit against the state from 200 residents who claim they purchased exchange plans but have yet to receive coverage.

Gov. Brian Sandoval (R) said that Xerox had "failed to perform its contractual duties," adding, "The board made the best decision it could under these difficult circumstances."

Meanwhile, a Xerox spokesperson called the decision "extremely disappointing" and cited the exchange's success in enrolling state residents in Medicaid. According to the company, nearly 190,000 Nevadans were determined to be eligible for Medicaid through the exchange

Oregon

Oregon became the first state to drop its exchange website and transition into the system managed by the federal government. The decision followed months of severe technical issues that made Oregon's marketplace one of the worst in the country.

About $130 million was spent on Cover Oregon, but it was the only enrollment system that won't let registrants buy coverage and qualify for tax credits in one sitting. It had not enrolled a single person online as of early March, and remained mired in glitches almost seven months after a rocky launch.

Additionally, as reported by Reuters: Oregon's Democratic governor wants the state's attorney general to sue the technology vendor that developed the embattled Cover Oregon website to recover payments, while officials from Oracle said on Friday any claims were unfounded.

The announcement by Governor John Kitzhaber seeking legal action comes as federal prosecutors have subpoenaed documents from Oregon's health exchange agency as part of a grand jury investigation into how the state used federal money to set up the now-failed health insurance exchange.

"The time has come to hold Oracle accountable for its failure to deliver technology that worked on the timelines the company committed to," Kitzhaber said in a statement on Thursday. "Today I have asked Oregon Attorney General Ellen Rosenblum to immediately initiate legal action to recover payments and other damages from Oracle."

"Oracle did not deliver," Kitzhaber said. "The poor quality of its work is obvious in the many bugs that are still not fixed, in missed deadlines (and) in the fundamental flaws in the system's architecture."

Oracle Corp., which the state paid about $134 million, defended its work and called Kitzhaber's move political.

"OHA and Cover Oregon were in charge and badly mismanaged the project by consistently failing to deliver requirements in a timely manner and failing to staff the project with skilled personnel," company officials said in a statement.

"We understand the political nature of the announcement just made and that the governor wants to shift blame from where it belongs. We look forward to an investigation that we are confident will completely exonerate Oracle."

Maryland

Maryland scrapped its malfunctioning health care exchange for the technology Connecticut developed for its Obamacare website, AccessHealthCT.

"The Health Exchange Board selected a partner with a proven track record to upgrade our website using a platform that has an established record of success," Maryland Gov. Martin O'Malley said. "We're confident that this partner will have the website upgraded by the time the next open enrollment period begins in November."

Connecticut's website was created with the help of private contractors, including Deloitte Consulting and KPMG. It is run by AccessHealthCT CEO Kevin Counihan, who once said his "mission is to make history."

Problems across the country

As signed into law four years ago, the Affordable Care Act encouraged all states to develop their own insurance marketplaces, each one tailored to its local environment. But only 14 states and the District of Columbia have attempted the feat.

In a late-March analysis, CNBC found that the state-run exchanges varied wildly in cost efficiency. Hawaii Health Connector had enrolled just 5,700 people, at a cost of more than $35,000 per enrollee, while Covered California had signed up more than a million people for about $1,000 each. Those costs will diminish over time, as the newly built systems keep enrolling people, but the wide disparities themselves raise an obvious question. Given the difficulty of building one efficient health insurance exchange, why try to build 50 of them?

August 15, 2013

AMA Reports Drop in Incorrect Health Claims for Third Year in a Row

The percentage of incorrectly processed health plan claims fell for the third straight year to 7.1% in 2013, according to the American Medical Association (AMA). The AMA's report can be found here.

In 2011, more than 19% of medical claims were incorrectly processed. Last year, the number dropped to 9.5% of claims.

The survey is based on a random sampling of nearly 2.6 million electronic claims from 450 physician practices submitted between February and March 2013. Payers included Aetna, Anthem Blue Cross Blue Shield, Cigna, Health Care Service Corporation, Humana, Regence, UnitedHealthcare, and Medicare.

If insurers sent a timely and accurate response to every claim received, $43 billion in administrative costs could have been saved, according to the AMA.

The AMA also found great variation in the accuracy of commercial payers. For example, Regence had the lowest claim accuracy rate at 85.03%. Medicare led all insurers with an accuracy rate of 98.10%.

The AMA report also showed that medical claim denials fell by nearly half in 2013, dropping from 3.48% in 2012 to 1.82% this year. The timeliness of medical claims processed also improved by 17% since the first AMA report in 2008.

The AMA also added an "Administrative Burden Index" this year to rank commercial insurers according to their level of unnecessary cost.

The report card found administrative tasks with health plans, such avoidable errors, inefficiency and waste in the medical claims process, cost an average of $2.36 per claim for doctors and payers. Cigna had the best cost per claim at $1.25, which was 47% below the commercial payer average. Health Care Service Corporation had the worst cost at $3.32 per claim, 41% above the commercial average.

According to the AMA, $12 billion a year could be saved if health plans eliminated unnecessary administrative tasks. This amount is equal to 21% of physicians' total administrative costs to ensure accurate payments from insurers.

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