Life Science Compliance Update

October 26, 2017

House Passes Medicare Part B Improvement Bill


Earlier this year the U.S. House of Representatives passed a bipartisan bill, the Medicare Part B Improvement Act of 2017. The bill would amend the Stark Law (Section 1877(h)(1) of the Social Security Act) and impact other provisions governing Medicare Part B. It is now in the hands of the Senate for further action.

The bill would codify Stark Law changes previously made by the Centers for Medicare and Medicaid Services in the Medicare Physician Fee Schedule that took effect on January 1, 2016.

Additionally, the bill would:

  • provide that the writing requirement for certain compensation arrangements may be satisfied by means determined by the HHS Secretary, including “a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties;”
  • to include provisions for “indefinite” holdovers involving certain personal service arrangements and leases of office space or equipment;
  • and to provide for up to 90 days to obtain missing signatures in certain compensation arrangements that have become noncompliant.

The bill also contains provisions relating to dialysis facilities, including: expanded access to home dialysis through the use of telehealth for monthly end stage renal disease (ESRD) visits, and providing for the survey and accreditation of dialysis facilities by accreditation bodies approved by the Secretary.

Additionally, the bill would provide a temporary transitional payment methodology for home infusion therapy services, under which home infusion drugs would be assigned to three payment categories, and each category would be designated a single payment amount and billed with Healthcare Common Procedure Coding System (HCPCS) codes specified in the bill.

The bill would also provide that the documentation created by an orthopedist or prosthetist would be considered part of the medical record to support a determination that orthotics and prosthetics are reasonable and medically necessary.

October 25, 2017

OIG Faults CMS for Improper Payment Rates


Under the Improper Payments Information Act of 2002, as amended, the Department of Health and Human Services (HHS) is required to annually report on improper payments and meet certain improvement metrics. In a report released last fall, HHS identified approximately $96.9 billion in gross improper payments in fiscal year (FY) 2016.  $90 billion of this money were found to be overpayments.

On May 16, 2017, the HHS Office of Inspector General (OIG) released a report examining these improper payments to determine HHS’s compliance with the statute.  In violation of the statute, the improper payment rates for both Medicare fee-for-service and Medicaid exceeded 10 percent in FY 2016. The OIG also found that HHS did not meet its improper payment reduction goals for the Medicare Advantage program and the Children’s Health Insurance Program (CHIP).

OIG Report

In the OIG findings, HHS largely agreed with what was reported. Working with Ernst & Young, it was determined HHS met many requirements but did not fully comply with IPIA. Among the items required for compliance with IPIA, EY determined HHS published the AFR for fiscal year (FY) 2016, conducted risk assessments for 22 programs deemed not susceptible to improper payments and determined the programs were not at risk for them, and published corrective action plans for 7 of the 8 programs OMB deemed susceptible to significant improper payments and all 5 programs deemed susceptible to significant improper payment under the Disaster Relief Appropriations Act (DRAA) (P.L. No. 113-2) that had not expended all funds by FY 2016.

EY concluded that HHS did not comply with several IPIA requirements. EY found HHS did not report an improper payment estimate for the Temporary Assistance for Needy Families program. EY also determined HHS did not achieve an improper payment rate of less than 10 percent for the Medicare Fee-for-Service and Medicaid programs; did not meet improper-payment-rate reduction targets for the Medicare Advantage program, the Children's Health Insurance Program, and the Foster Care program; and did not conduct recovery audits for the Medicare Advantage program.

OIG Recommendations

According to the OIG, HHS has not fully addressed recommendations from the prior years’ OIG performance audits related to improper payments, including the need to provide an improper payment estimate and corrective action plan for TANF, meet certain improper payment rate reduction targets, and reduce improper payment rates to below 10%. Addressing these recommendations would improve HHS’s compliance with the IPIA, as amended, including compliance issues identified in the current findings.

Some of the recommendations include:

  • HHS first focus on implementing an approach to reporting on TANF improper payment as this process will aid in identifying root causes of TANF improper payments. However, OIG recommends that HHS develop and publish corrective action plans after implementing an approach.
  • OIG recommend that HHS and ACF continue working with states to (1) provide technical assistance and training related to policy updates and (2) support the Foster Care program in reaching its overall reduction goal target through appropriate implementation of corrective action plans at the state-level.
  • OIG recommend HHS proactively take action throughout the fiscal year to achieve its established improper payment target rates. Medicare Advantage did not achieve the target rate mainly due to insufficient documentation by third parties, and therefore, OIG recommend, for example, that HHS continue to work with the Medicare Advantage plans and providers to communicate the documentation requirements and monitor the adherence to such requirements throughout the year.
  • In addition, CHIP did not achieve its target rate in FY 2016 due to administrative or process errors made by the state or local agencies, and as a result, OIG recommend, for example, that HHS work with the states to bring their respective systems into compliance to implement new requirements.
  • OIG recommend that HHS focus on the root causes for the improper payment rate percentage and evaluate critical and feasible action steps to decrease the improper payment rate percentage below 10%.
  • OIG recommended that HHS focus on the root causes of the improper payment percentage and evaluate critical and feasible action steps to assist states with their compliance efforts for these new requirements.
  • This would include working with the states to bring their respective systems into full compliance with new requirements to decrease the improper payment rate percentage below 10%. In addition, as HHS only reviews 17 states each year for the Medicaid improper payment rate, HHS should continue to follow up with states during the interim period to verify that corrective actions identified after the improper payment error rate measurement review are being implemented.
  • OIG recommend that HHS actively search for RAC contractors for Medicare Advantage (Part C) and finalize the award in a timely manner with the intention to perform RAC audits in FY 2017.

October 05, 2017

CMS Announces the End of Part B Demonstration

End title 590

The Centers for Medicare & Medicaid Services (CMS) announced it will officially withdraw the controversial Obama-era Medicare Part B Drug Payment Model Demonstration, almost ten months after the Obama administration announced that they would not finalize the demo. Under President Obama, CMS ultimately decided to withdraw the proposed rule after an overwhelming backlash from bipartisan lawmakers, the pharmaceutical industry, and patient stakeholders.

The Demonstration

The two-phase nationwide demonstration, driven by the Center for Medicare and Medicaid Innovation (CMMI), would have tested reformed Average Sales Price (ASP) payment for Medicare Part B medicines using ASP plus 2.5 percent and a flat fee during Phase I. A planned Phase II had envisioned the application of value-based purchasing tools, potentially including reference-based pricing, indications-based pricing, risk-sharing agreements, and other methods.

Stakeholders Against Demonstration

Republicans and even some Democrats in Congress objected to the proposed demonstration, arguing that it could limit patient access to certain drugs, is too large in scope, and could harm independent, small and rural physician practices. Many pharmaceutical stakeholders, doctors, and some consumer groups opposed the demonstration, and will likely point to it as evidence to why Congress should consider curbing the wide-ranging authority of CMMI.

Example of Physician Position

Many physician groups opposed the Part B Demonstration, but the American College of Rheumatology’s statement explains the general concerns they held with the Demonstration.

Statement from Dr. Sharad Lakhanpal, MBBS, MD, President of the American College of Rheumatology:

"The American College of Rheumatology commends the Centers for Medicare and Medicaid Services (CMS) for finalizing its decision to withdraw the Part B Drug Payment Demonstration. We thank CMS leadership for listening to the rheumatology community's concerns about the negative impacts this proposal would have on patient choice and access to life-saving biologic therapies.

"For millions of Americans living with painful and debilitating rheumatic diseases, safe and reliable access to biologic infusion therapies is not a luxury but a necessity. That's why the ACR has strongly voiced opposition to this proposed rule and its potentially negative, unintended consequences for rheumatology patients and providers alike.

"The ability for our Medicare patients to access biologic therapy infusions - particularly in rural and underserved areas of the country - is already tenuous because the current payment structure does not fully cover the cost of procuring and administering these therapies in the outpatient setting. If the additional payment cuts from the demonstration project were to go through, many rheumatology providers would be forced to stop administering biologic infusion therapies altogether. This would in turn force patients to seek treatment in less safe and more expensive settings, if they were able to access biologic therapies at all.

"While the ACR has vigorously opposed the Part B demonstration project, we remain supportive of CMS' broader effort to improve healthcare quality, accessibility and affordability in the Medicare system while reining in excessive drug costs. In the future, we look forward to working with CMS to develop a payment model that achieves these goals while also ensuring patients can continue to access high-quality rheumatology care and treatments."


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