Washington Healthcare Update

August 25, 2014

Pardon Our Dust

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***Programming Note: There will be no Weekly Washington Health Care Update next week (Sept. 1) in observance of Labor Day.

1. Congress

House of Representatives


  • State Work Period — No Legislative Activity

2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


Chairman Brady Releases Medicare Fraud Draft

On Aug. 7, 2014, Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX) released a discussion draft of legislation entitled “The Protecting the Integrity of Medicare Act of 2014” (PIMA). PIMA focuses on addressing weaknesses in the Medicare program that have led to considerable waste, fraud and abuse, estimated to be as high as 10 percent of the $574 billion program. The draft consists of an assortment of specific policy items championed by various members of the committee, including a provision long advocated by Social Security Subcommittee Chairman Sam Johnson (R-TX) to remove Social Security numbers from beneficiaries’ Medicare cards. In total, Brady’s draft squeezes 25 individual sections into just 58 pages of legislative text. Though the focus of the draft language is to fight fraud within Medicare, provisions aimed at shoring up Medicaid and the Children’s Health Insurance Program (CHIP) are included as well. Specifically, the draft would allow Medicaid fraud control units to investigate and prosecute complaints of abuse and neglect of Medicaid patients in home and community-based facilities. It would also provide the Health and Human Services secretary greater flexibility in how available resources are used to protect Medicaid from fraud, waste and abuse. Industry stakeholders are asked to submit comments or questions on the draft to nyu@mail.house.gov by Sept. 1.


State Work Period — No Legislative Activity

2. Administration

CMS: Open Payment Verification System Repaired; Deadline Extended for Physician Payment Review

CMS announced Aug. 15 that the Open Payment verification system site is back online following a 12-day suspension. The suspension was as a result of an investigation following a physician complaint that “manufacturers and group purchasing organizations (GPO) [had] submitted intermingled data, such as wrong state license number or national provider identifier (NPI) for physicians with the same last and first names,” an Aug. 15 CMS email to physicians said. The Open Payments program, a result of the Physician Payments Sunshine Act, mandates that GPOs and manufacturers of medical supplies, devices and pharmaceuticals report certain physician or teaching hospital payment information to CMS. At the end of July CMS began allowing physicians to log on to the CMS site to review disclosures on themselves and report inaccuracies. As a result of the site suspension, physicians now have an extended deadline of Sept. 8 to review reported payment information submitted for them from August 2013 through December 2013. Worth noting, this is not the first time the program has been criticized. Physicians have already cited difficulty registering with the system as well as issues with the accuracy of reported data. Following the three-week physician review period, CMS says that despite the unexpected delay, payment data will be publically available no later than Sept. 30.

For more information please see the official CMS announcement.

CMS: Guidance Released on Training and Certification for ACA Navigators and Other Assisters

On Aug. 15, CMS issued official guidance on the training and certification of “navigators” and other certified application counselors and assisters in the Affordable Care Act (ACA) marketplaces. This guidance comes in preparation for 2015 open enrollment in the individual federally run or state partnership exchanges beginning on Nov. 15, 2014. The bulletin outlines a 20-hour training regimen for certified navigators as well as a 5- to 10-hour training process for certified application counselors. Starting in September, official training through the Medicare Learning Network (MLN) will be available for the federally facilitated marketplace enhancements; the new official training also details more specific information on immigration, deriving particular household income scenarios, assistance to survivors of domestic violence and enrolling college students. According to the bulletin, all current assisters seeking recertification as well as new assisters will be required to take the new training on the MLN website, which will be taken down for several weeks and reprogramed to prepare for the new requirements.

OMB: Final Medicare Fraud Rule Under Review

Last week, CMS sent a final rule to the Office of Management and Budget (OMB) implementing several provider enrollment policies intended to combat fraud on the part of medical suppliers, such as expanding the instances in which a felony conviction can serve as a basis for denial or revocation of a provider’s or supplier’s enrollment. In addition, the final rule would change the Incentive Reward Program potential reward amount for information on individuals and entities who are engaging or have engaged in acts or omissions that resulted in the imposition of a sanction from 10 percent of the overpayments recovered in the case or $1,000, whichever is less, to 15 percent of the final amount collected applied to the first $66,000,000 for the sanctionable conduct.

3. State Activities

Following Audit, CMS Halts an Ohio Medicare Advantage Provider’s Plan Enrollment

On Aug. 11, CMS issued a letter to SummaCare Inc., an Akron, Ohio-based Medicare Advantage managed care provider, suspending all new enrollment and marketing activities. Citing multiple, serious violations, Centers for Medicare and Medicaid Services (CMS) Director of Medicare Part C and D Oversight and Enforcement Gerard Mulchahy said in his letter that these problems posed “a serious threat to the health and safety of enrollees… [stemming from the] ineffective monitoring and oversight” of the plan’s pharmacy benefit manager. CMS said the 38 violations resulted in Medicare beneficiaries’ experiencing delays or denials of medications and services and increased out-of-pocket costs. The sanctions resulted from a routine CMS audit of SummaCare’s Medicare operations from June 2 to June 13, and 25 of the 38 violations involved Medicare Part D. While the original deadline for corrective action was mandated for Aug. 18, CMS has extended the deadline until Sept. 5 for the company to submit its plans to fix how it handles consumer appeals and grievances. Worth noting, CMS said the federal action does not affect coverage or benefits for current enrollees, but that the company is required to alert all enrollees about the sanctions. SummaCare is Summit County’s largest Medicare managed-care plan, with about 16,500 enrollees from Summit County and more than 33,000 in 41 counties in the northern half of Ohio.

4. Regulations Open for Comment

Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule, Access to Identifiable Data for the Center for Medicare and Medicaid Innovation Models & Other Revisions to Part B for CY 2015

CMS released its proposal for the 2015 Medicare physician fee schedule on July 3 with suggested changes relating to Chronic Care Management (CCM) and Accountable Care Organizations (ACO). Medicare doctors who provide CCM services may be required starting in 2015 to use an electronic health record or other health information exchange platform to ensure their patients” care plans are electronically accessible to any provider caring for those patients. Medicare providers would also be required to use electronic health records certified under the Office of the National Coordinator for Health Information Technology”s certification program as having the capabilities to capture and report CCM data. ACOs were also addressed in the new fee schedule, as the proposed rule would increase the number of ACO quality measures with an increased focus on outcomes. Under the proposal, the total number of measures for quality reporting would increase from 33 to 37. Under the Medicare Shared Savings Program (MSSP), ACOs must meet certain quality targets to claim shared savings bonuses. Specifically, new measures would be added to focus on avoidable admissions for patients with multiple chronic conditions, heart failure and diabetes; depression remission; all-cause readmissions to a skilled nursing facility; and stewardship of patient resources, the agency said. The agency added that the existing composite measures for diabetes and coronary artery disease would also be updated. Comments must be received by Sept. 2, 2014.

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Physician-Owned Hospitals: Data Sources for Expansion Exception; Physician Certification of Inpatient Hospital Services; Medicare Advantage Organizations and Part D Sponsors: Appeals Process for Overpayments Associated with Submitted Data

CMS has issued a proposed rule that would revise the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2015 to implement applicable statutory requirements and changes arising from continuing experience with these systems. The proposed rule describes the proposed changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this proposed rule would update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

CMS is also proposing changes to the data sources used for expansion requests for physician-owned hospitals under the physician self-referral regulations; changes to the underlying authority for the requirement of an admission order for all hospital inpatient admissions and changes to require physician certification for hospital inpatient admissions only for long-stay cases and outlier cases; and changes to establish a three-level appeals process for Medicare Advantage (MA) organizations and Part D sponsors that would be applicable to CMS-identified overpayments associated with data submitted by these organizations and sponsors. Comments must be received by Sept. 2, 2014.

Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies

This rule proposes to update and make revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2015. This rule also proposes to set forth requirements for the ESRD quality incentive program (QIP), including payment years (PYs) 2017 and 2018. This rule also proposes to make a technical correction to remove outdated terms and definitions. In addition, this rule proposes to set forth the methodology for adjusting Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) fee schedule payment amounts using information from the Medicare DMEPOS Competitive Bidding Program (CBP); make alternative payment rules for DME and enteral nutrition under the Medicare DMEPOS CBP; clarify the statutory Medicare hearing aid coverage exclusion and specify devices not subject to the hearing aid exclusion; update the definition of minimal self-adjustment regarding what specialized training is needed by suppliers to provide custom fitting services if they are not certified orthotists; clarify the Change of Ownership (CHOW) and provides for an exception to the current requirements; revise the appeal provisions for termination of a contract and notification to beneficiaries under the Medicare DMEPOS CBP, and add a technical change related to submitting bids for infusion drugs under the Medicare DMEPOS CBP. Comments must be received by Sept. 2, 2014.

5. Reports

TIGTA: IRS Cannot Determine Who Is Not Paying Device Tax

On Aug. 19, the Treasury Inspector General for Tax Administration (TIGTA) released a report detailing information on how the Internal Revenue Service (IRS) is having difficulty determining which manufacturers are obligated to pay the medical device tax. Under the Affordable Care Act (ACA), nonexempt medical device businesses, including manufacturers, producers and importers, are required to pay an excise tax equaling 2.3 percent on the sales price for medical devices sold. TIGTA found that the biggest concern for identifying mandated device taxpayers stems from the reality that IRS relies on a database of registered medical device manufacturers administered by the Food and Drug Administration (FDA) and that FDA-collected data “cannot be definitively used to identify manufacturers subject to the medical device tax reporting and payment requirements.” Likewise, there are several specific exemptions, safe harbors and retail specifications such that not all businesses registered with the FDA are engaged in taxable medical devices. Also of note, TIGTA found that both the number of quarterly federal excise tax returns and the amount of revenue being reported (a difference of approximately $286.6 million) are below initial IRS estimates. Finally, TIGTA found that IRS also cannot ensure the accuracy of existing medical device excise tax figures reported, identifying $117.8 million in discrepancies in the excise tax amount captured by the IRS. As part of the report, TIGRA provided several recommendations for IRS to improve collection and identification of device taxpayers, including reviewing the 276 tax returns to determine the proper excise tax owed, establishing a process for verifying the accuracy of tax amounts for paper-filed Forms 720, and initiating a process to correspond with taxpayers to obtain missing taxable sales or tax amounts.

OIG: Nursing Facilities’ Compliance with Federal Regulations for Reporting Allegations of Abuse or Neglect

According to a report released by the HHS-OIG on Aug. 15, 85 percent of nursing facilities reported at least one allegation of abuse or neglect in 2012. Additionally, 76 percent of nursing facilities maintained policies that address Federal regulations for reporting both allegations of abuse or neglect and investigation results. Further, 61 percent of nursing facilities had documentation supporting the facilities’ compliance with both Federal regulations under Section 1150B of the Social Security Act. Lastly, 53 percent of allegations of abuse or neglect and the subsequent investigation results were reported, as Federally required. OIG recommends that CMS ensure that nursing facilities: (1) maintain policies related to reporting allegations of abuse or neglect; (2) notify covered individuals of their obligation to report reasonable suspicions of crimes; and (3) report allegations of abuse or neglect and investigation results in a timely manner and to the appropriate individuals, as required. CMS concurred with all three of recommendations.

If you have any questions, please contact Stephanie Kennan, Senior Vice President, or Brian Looser, Assistant Vice President, at McGuireWoods Consulting.

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering state and federal government relations, national/multistate strategies, infrastructure and economic development, strategic communications and grassroots issue management services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and in 2010 was ranked in the Top 20 of The National Law Journal‘s “The Influence 50,” an annual report of the top public affairs firms in Washington, D.C.

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