Health Care Week in Review August 8, 2014

A&B Healthcare Week in Review, August 8, 2014

Healthcare Week in Review


  • On August 4, 2014, the Centers for Medicare and Medicaid Services (CMS) released a final rule entitled “Medicare Program; FY 2015 Hospice Wage Index and Payment Rate Update; Hospice Quality Reporting Requirements and Process and Appeals for Part D Payment for Drugs for Beneficiaries Enrolled in Hospice”. This final rule will update the hospice payment rates and the wage index for fiscal year (FY) 2015 and continue the phase-out of the wage index budget neutrality adjustment factor (BNAF). This rule provides an update on hospice payment reform analyses, potential definitions of “terminal illness” and “related conditions,” and information on potential processes and appeals for Part D payment for drugs while beneficiaries are under a hospice election. This rule will specify timeframes for filing the notice of election and the notice of termination/revocation; add the attending physician to the hospice election form, and require hospices to document changes to the attending physician; require hospices to complete their hospice aggregate cap determinations within 5 months after the cap year ends, and remit any overpayments; and update the hospice quality reporting program. In addition, this rule will provide guidance on determining hospice eligibility; information on the delay in the implementation of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM); and will further clarify how hospices are to report diagnoses on hospice claims. Finally, the rule will make a technical regulations text change. A CMS fact sheet on the rule may be found here.
  • On August 4, 2014, CMS released a final rule entitled Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Fiscal Year 2015 Rates; Quality Reporting Requirements for Specific Providers; Reasonable Compensation Equivalents for Physician Services in Excluded Hospitals and Certain Teaching Hospitals; Provider Administrative Appeals and Judicial Review; Enforcement Provisions for Organ Transplant Centers; and Electronic Health Record (EHR) Incentive Program. CMS is revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals. Some of these changes implement certain statutory provisions contained in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively known as the Affordable Care Act, or ACA), the Protecting Access to Medicare Act of 2014, and other legislation. These changes are applicable to discharges occurring on or after October 1, 2014, unless otherwise specified in the final rule. CMS is also updating the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits. The updated rate-of-increase limits are effective for cost reporting periods beginning on or after October 1, 2014. CMS is also updating the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs) and implementing certain statutory changes to the LTCH PPS under the Affordable Care Act and the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 and the Protecting Access to Medicare Act of 2014. In addition, the rule discusses CMS’ proposals on the interruption of stay policy for LTCHs and on retiring the “5 percent” payment adjustment for co-located LTCHs. While many of the statutory mandates of the Pathway for SGR Reform Act apply to discharges occurring on or after October 1, 2014, others will not begin to apply until 2016 and beyond. In addition, CMS is making a number of changes relating to direct graduate medical education (GME) and indirect medical education (IME) payments. CMS is establishing new requirements or revising requirements for quality reporting by specific providers (acute care hospitals, PPS-exempt cancer hospitals, and LTCHs) that are participating in Medicare. CMS is updating policies relating to the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition (HAC) Reduction Program. In addition, CMS is making technical corrections to the regulations governing provider administrative appeals and judicial review; updating the reasonable compensation equivalent (RCE) limits, and revising the methodology for determining such limits, for services furnished by physicians to certain teaching hospitals and hospitals excluded from the IPPS; making regulatory revisions to broaden the specified uses of Medicare Advantage (MA) risk adjustment data and to specify the conditions for release of such risk adjustment data to entities outside of CMS; and making changes to the enforcement procedures for organ transplant centers. CMS is aligning the reporting and submission timelines for clinical quality measures for the Medicare EHR Incentive Program for eligible hospitals and critical access hospitals (CAHs) with the reporting and submission timelines for the Hospital IQR Program. In addition, the rule provides guidance and clarification of certain policies for eligible hospitals and CAHs such as CMS’ policy for reporting zero denominators on clinical quality measures and the policy for case threshold exemptions. CMS is finalizing two interim final rules with comment period relating to criteria for disproportionate share hospital uncompensated care payments and extensions of temporary changes to the payment adjustment for low-volume hospitals and of the Medicare-Dependent, Small Rural Hospital (MDH) Program. A CMS fact sheet on the rule may be found here. A fact sheet specifically on CMS proposal to improve quality of care during inpatient hospital stays may be found here.
  • On August 4, 2014, the Food and Drug Administration (FDA) requested Office of Management and Budget (OMB) approval for an information collection project entitled “Food and Drug Administration Recall Regulations”. This notice solicits comments on FDA recalls for human drugs, biological products, devices, animal drugs, food, cosmetics, and tobacco. Section 701 of the Federal Food, Drug, and Cosmetic Act (the FD Act) charges the Secretary of Health and Human Services (HHS), through the FDA, with the responsibility of assuring recalls. The guidelines apply to all FDA-regulated products (i.e., food, including animal feed; drugs, including animal drugs; medical devices, including in vitro diagnostic products; cosmetics; biological products intended for human use; and tobacco). Comments are due October 3, 2014.
  • On August 5, 2014, FDA announced the availability of draft guidance for industry entitled “Reference Product Exclusivity for Biological Products Filed Under Section 351(a) of the PHS Act.” This draft guidance is intended to assist sponsors developing biological products, sponsors holding biologics license applications (BLAs), and other interested parties in providing information and data that will help the Agency determine the date of first licensure for a reference product under 351(k)(7)(C) of the Public Health Service Act (PHS Act), as added by the Biologics Price Competition and Innovation Act of 2009 (BPCI Act). The BPCI Act amends the PHS Act and other statutes to create an abbreviated licensure pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed biological reference product. Comments on the draft guidance are due October 6, 2014. More information may be found here.
  • On August 5, 2014, FDA announced the availability of guidance entitled “Design Considerations for Devices Intended for Home Use”. This document is intended to assist manufacturers in designing and developing home use medical devices that comply with applicable standards of safety and effectiveness and other regulatory requirements. Devices used in the home or other non-clinical environments are associated with unique risks created by the interactions among the user (often a layperson), the use environment, and the device. This document identifies several factors that manufacturers should consider, especially during device design and development, and provides recommendations for minimizing these unique risks. More information may be found here.
  • On August 6, 2014, FDA announced the availability of guidance entitled “In Vitro Companion Diagnostic Devices.” This guidance is intended to assist sponsors who are planning to develop a therapeutic product for which the use of an in vitro companion diagnostic device is essential for the therapeutic product's safe and effective use as well as sponsors planning to develop an in vitro companion diagnostic device that is intended to be used with a corresponding therapeutic product. More information may be found here.
  • On August 6, 2014, FDA issued draft guidance for industry entitled “Upper Facial Lines: Developing Botulinum Toxin Drug Products.” The purpose of this draft guidance is to assist sponsors with their clinical trial designs using botulinum toxin drug products intended for the treatment of upper facial lines. This draft guidance clarifies FDA's thinking on endpoint development and clinical trial design considerations for botulinum toxin drug products that present unique safety concerns. Comments are due November 4, 2014. More information may be found here.
  • On August 7, 2014, the FDA’s Center for Devices and Radiological Health (CDRH) announced a new component of the Experiential Learning Program (ELP) identified as the ELP General Training Program. This training component is intended to provide CDRH staff with an opportunity to understand the policies, laboratory practices, and challenges faced in broader disciplines that impact the device development life cycle. The purpose of this document is to invite medical device industry, academia, and health care facilities to apply to participate in this formal training program for FDA's medical device review staff, or to contact CDRH for more information regarding the ELP General Training Program. Requests for participation must be submitted by September 8, 2014. More information may be found here.
  • On August 8, 2-14, CMS issued a request for a new OMB control number for an information collection entitled “Quarterly Medicaid and CHIP Budget and Expenditure Reporting for the Medical Assistance Program, Administration and CHIP”. At the request of OMB, this action would consolidate form CMS-21 and -21B (OMB control number: 0938-0731), -37 (OMB control number: 0938-0101), and -64 (OMB control number: 0938-0067) into one new information collection request. This action also revises CMS-37 and -67 while CMS-21 and -21B remain unchanged. Form CMS-21 and -21B provide CMS with the information necessary to issue quarterly grant awards, monitor current year expenditure levels, determine the allowability of state claims for reimbursement, develop Children's Health Insurance Program (CHIP) financial management information, provide for state reporting of waiver expenditures, and ensure that the federally established allotment is not exceeded. They are also necessary in the redistribution and reallocation of unspent funds over the federally mandated timeframes. Comments are due October 7, 2014.
  • A CMS rule entitled “Medicare Secondary Payer and "Future Medicals" (CMS-6047-P)” is under review at OMB. This proposed rule would announce CMS' intention regarding means beneficiaries or their representatives may use to protect Medicare's interest with respect to Medicare Secondary Payer (MSP) claims involving automobile and liability insurance (including self-insurance), no-fault insurance, and workers' compensation where future medical care is claimed or the settlement, judgment, award, or other payment releases (or has the effect of releasing) claims for future medical care.


U.S. Senate

  • The Senate is in recess for the remainder of the month and will reconvene for regular legislative business on Monday September 8th.
  • On August 7, 2014, President Barack Obama signed into law HR 3230, the , the Veterans' Access to Care through Choice, Accountability, and Transparency Act of 2014 (Public Law No: 113-146), following passage by the House and Senate last week. The $17 billion Act is intended to improve veterans’ access to medical care, including by allowing some veterans to use private providers. Provisions of the Act related to care provided by private entities are summarized below. The Act also includes a variety of provisions (not discussed here) related to Department of Veterans Affairs (VA) staffing, VA facilities, authority to fire VA executives for misconduct, and support for veterans and families.

House of Representatives

  • The House is in recess for the remainder of the month and will reconvene for regular legislative business on Monday September 8th.
  • On August 7, 2014, House Ways and Means Subcommittee on Health Chairman Kevin Brady (R-TX) released the Protecting Integrity in Medicare Act of 2014 (PIMA), a discussion draft aimed at combating fraud, waste and abuse in the Medicare program. Upon releasing the discussion draft, Chairman Brady made the following statement: "I’m pleased to release a discussion draft of the Protecting Integrity in Medicare Act (PIMA) of 2014. This draft bill builds off the bipartisan work highlighted during an April 2014 Ways and Means Health Subcommittee hearing and is an important step to taking a strong stand against the rampant fraud, waste, and abuse that currently plagues the Medicare program…This draft includes bipartisan priorities, ranging from finally removing social security numbers from Medicare cards, a priority for Sam Johnson and Lloyd Doggett, to provisions of Peter Roskam’s bipartisan PRIME Act which would increase efficiencies and education for providers to reduce fraud, waste, and abuse within the system.” Chairman Brady welcomes stakeholders to submit questions or comments on the discussion draft to by September 1, 2014.
  • On August 7, 2014, House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) criticized a response this week from HHS regarding an October 2013 Oversight Committee subpoena for documents regarding the Health Insurance Marketplace. The HHS letter acknowledges that, “In the course of compiling and reviewing the documents for these priority custodians, we determined that some of [CMS Administrator Marilyn] Tavenner’s potentially responsive emails might not be retrievable…While we have not identified any specific emails that we will be unable to retrieve, it is possible that some emails may not be available to HHS”. In a statement, Issa said, “Today’s news that a senior HHS executive destroyed emails relevant to a congressional investigation means that the Obama Administration has lost or destroyed emails for more than 20 witnesses, and in each case, the loss wasn’t disclosed to the National Archives or Congress for months or years, in violation of federal law”.
  • On August 7, 2014, the House Foreign Affairs Committee convened an emergency hearing on the recent outbreak of Ebola in West Africa, entitled “Combating the Ebola Threat”. Witnesses for the hearing included Tom Frieden, M.D., Director, Centers for Disease Control and Prevention (CDC); Ariel Pablos-Méndez, M.D., Assistant Administrator, Bureau for Global Health, U.S. Agency for International Development (USAID); and The Honorable Bisa Williams, Deputy Assistant Secretary, Bureau of African Affairs, U.S. Department of State. More information on the hearing may be found here.


  • This week Health Affairs published its August 2014 issue, available here. Featured abstracts are listed below:
    • Medicaid Admissions And Readmissions: Understanding The Prevalence, Payment, And Most Common Diagnoses: Authors sought to characterize acute care hospital admissions and thirty-day readmissions in the Medicaid population through a retrospective analysis in nineteen states. They found that Medicaid readmissions were both prevalent (9.4 percent of all admissions) and costly ($77 million per state) and they represented 12.5 percent of Medicaid payments for all hospitalizations. Five diagnostic groups appeared to drive Medicaid readmissions, accounting for 57 percent of readmissions and 49 percent of hospital payments for readmissions.
    • Bundled Payment Fails To Gain A Foothold In California: The Experience Of The IHA Bundled Payment Demonstration: To determine whether bundled payment could be an effective payment model for California, the Integrated Healthcare Association convened a group of stakeholders (health plans, hospitals, ambulatory surgery centers, physician organizations, and vendors) to develop, through a consensus process, the methods and means of implementing bundled payment. In spite of a high level of enthusiasm and effort, the pilot did not succeed in its goal to implement bundled payment for orthopedic procedures across multiple payers and hospital-physician partners. An evaluation of the pilot documented a number of barriers, such as administrative burden, state regulatory uncertainty, and disagreements about bundle definition and assumption of risk.
    • Children’s Health Insurance Program Premiums Adversely Affect Enrollment, Especially Among Lower-Income Children: Thirty-three states charged premiums for children at some income ranges in CHIP or Medicaid in 2013. Using data from the 1999–2010 Medical Expenditure Panel Surveys, researchers show that the relationship between premiums and coverage varies considerably by income level and by parental access to employer-sponsored insurance. Among children with family incomes above 150 percent of the federal poverty level, a $10 increase in monthly premiums is associated with a 1.6-percentage-point reduction in Medicaid or CHIP coverage.
    • ACA Dependent Coverage Provision Reduced High Out-Of-Pocket Health Care Spending For Young Adults: Since September 2010 the ACA has required that insurers allow children to remain as dependents on their parents’ private insurance plans until age twenty-six. Studies have shown that this provision increased coverage rates among young adults. In this article authors analyze whether the provision also protected young adults from large and uncertain out-of-pocket expenses. They found that the policy was associated with a statistically significant reduction in the share of young adults facing annual out-of-pocket expenditures greater than $1,500 (decreasing from 4.2 percent to 2.9 percent), compared to an increase in the proportion of their slightly older peers facing such expenditures (increasing from 4.4 percent to 5.4 percent), a net difference of −2.4 percentage points, or 57 percent.
    • Price Transparency For MRIs Increased Use Of Less Costly Providers And Triggered Provider Competition: To encourage patients to select high-value providers, an insurer-initiated price transparency program that focused on elective advanced imaging procedures was implemented. Patients having at least one outpatient magnetic resonance imaging (MRI) scan in 2010 or 2012 were divided according to their membership in commercial health plans participating in the program (the intervention group) or in nonparticipating commercial health plans (the reference group) in similar US geographic regions. Patients in the intervention group were informed of price differences among available MRI facilities and given the option of selecting different providers. For those patients, the program resulted in a $220 cost reduction (18.7 percent) per test and a decrease in use of hospital-based facilities from 53 percent in 2010 to 45 percent in 2012. Price variation between hospital and nonhospital facilities for the intervention group was reduced by 30 percent after implementation. Nonparticipating members residing in intervention areas also observed price reductions, which indicates increased price competition among providers. The program significantly reduced imaging costs. This suggests that patients select lower-price facilities when informed about available alternatives.
    • Health Spending Slowdown Is Mostly Due To Economic Factors, Not Structural Change In The Health Care Sector: Authors used new and unique data on privately insured people to estimate the effect of the economic slowdown that began in December 2007 on the rate of growth in health spending. By exploiting regional variations in the severity of the slowdown, they determined that the economic slowdown explained approximately 70 percent of the slowdown in health spending growth for the people in our sample. This suggests that the recent decline is not primarily the result of structural changes in the health sector or of components of the Affordable Care Act, and that—absent other changes in the health care system—an economic recovery will result in increased health spending.
    • Medication Affordability Gains Following Medicare Part D Are Eroding Among Elderly With Multiple Chronic Conditions: Elderly Americans, especially those with multiple chronic conditions, face difficulties paying for prescriptions, which results in worse adherence to and discontinuation of therapy, called cost-related medication non-adherence. Medicare Part D, implemented in January 2006, was supposed to address issues of affordability for prescriptions. Authors investigated whether the gains in medication affordability attributable to Part D persisted during the six years that followed its implementation. Overall, they found continued incremental improvements in medication affordability in the period 2007–09 that eroded during the period 2009–11. Among elderly beneficiaries with four or more chronic conditions, they observed an increase in the prevalence of cost-related nonadherence from 14.4 percent in 2009 to 17.0 percent in 2011, reversing previous downward trends.
    • The Pennsylvania Project: Pharmacist Intervention Improved Medication Adherence And Reduced Health Care Costs: Improving medication adherence across the health care system is an ingredient that is vital to improving patient outcomes and reducing downstream health care costs. The Pennsylvania Project, a large-scale community pharmacy demonstration study, evaluated the impact of a pharmacy-based intervention on adherence to five chronic medication classes. To implement the study, 283 pharmacists from a national community pharmacy chain were assigned to the intervention group. Collectively, they screened 29,042 patients for poor adherence risk and provided brief interventions to people with an elevated risk. Compared to a control group of 295 pharmacists who screened 30,454 patients, the intervention significantly improved adherence for all medication classes, from 4.8 percent for oral diabetes medications to 3.1 percent for beta-blockers. Additionally, there was a significant reduction in per patient annual health care spending for patients taking statins ($241) and oral diabetes medications ($341). This study demonstrated that pharmacist-provided intervention is a cost-effective tool that may be applied in community pharmacies and health care sites across the country.
    • Era Of Faster FDA Drug Approval Has Also Seen Increased Black-Box Warnings And Market Withdrawals: After approval, many prescription medications that patients rely on subsequently receive new black-box warnings or are withdrawn from the market because of safety concerns. Researchers examined whether the frequency of these safety problems has increased since 1992, when the Prescription Drug User Fee Act, legislation designed to accelerate the drug approval process at the FDA, was passed. They found that drugs approved after the Act’s passage were more likely to receive a new black-box warning or be withdrawn than drugs approved before its passage (26.7 per 100.0 drugs versus 21.2 per 100.0 drugs at up to sixteen years of follow-up). The study does not establish causality.
  • On August 4, 2014, the Office of Inspector General (OIG) released a report entitled “The Office of the National Coordinator for Health Information Technology’s [ONC] Oversight of the Testing and Certification of Electronic Health Records [EHR]”. As of December 2013, CMS had paid more than $19 billion in incentive payments to more than 340,000 providers who have attested to using EHRs. To receive incentive payments, providers must use EHRs that have been certified by an authorized testing and certification body (ATCB) in accordance with Federal security standards. The objectives of this review were to assess whether (1) ONC’s oversight of ATCBs ensured that electronic patient information was secure and protected; 2) the ATCBs’ standards and procedures for testing and certifying EHRs met National Institute of Standards and Technology (NIST) test procedure requirements; and 3) NIST test procedures were sufficient to secure and protect electronic patient information. OIG found that ONC’s oversight of the ATCBs did not fully ensure that test procedures and standards could adequately secure and protect electronic patient information contained in EHRs. The report finds that the ATCBs’ standards and procedures for testing and certifying EHRs met all NIST test procedure requirements that ONC approved. However, those NIST test procedures were not sufficient to ensure that EHRs would adequately secure and protect patient health information; in particular, the procedures allowed ATCBs to certify EHRs that demonstrated the use of a single-character password during testing. In addition, the NIST test procedures did not address common security issues such as password complexity. OIG recommended that ONC require ATCBs to 1) develop procedures to periodically evaluate whether certified EHRs continue to meet Federal standards; and 2) develop a training program to ensure that their personnel are competent to test and certify EHRs and to secure proprietary or sensitive EHR information.
  • This week the Treasury Department released a report entitled “Affordable Care Act: Accuracy of Responses to Exchange Requests for Income and Family Size Verification Information and Maximum Advance Premium Tax Credit Calculation”. According to the report, the Internal Revenue Service (IRS) accurately calculated maximum ACA premium tax credits for the 120,824 requests it received between October 1st and October 14th, 2013. However, the Treasury Inspector General for Tax Administration (TIGTA) identified 33 requests for which the IRS incorrectly notified the Exchange that it could not provide tax information for individuals for whom the Exchange was requesting information because the IRS was unable to match the name on the application to IRS data records. These responses were incorrect because the individual’s name used on the application was in fact available in IRS data records. This resulted from a computer programming error in which IRS data used to provide information in response to Exchange requests did not always contain the most recent name information shown in the individual’s tax account. The report recommended that the Chief Technology Officer ensure that IRS data records used to provide responses to Exchange requests accurately reflect an individual’s most recent name information contained in IRS tax data. The IRS concurred with these recommendations and has already implemented programming modifications so that name information fields are now consistent with the most recent name information shown on the individual’s tax account.
  • On August 5, 2014, Gallup released the results of a poll which finds that Arkansas and Kentucky lead all other states in the sharpest reductions in their uninsured rate among adult residents since the healthcare law's requirement to have insurance took effect at the beginning of the year. Delaware, Washington, and Colorado round out the top five. All 10 states that report the largest declines in uninsured rates expanded Medicaid and established a state-based marketplace exchange or state-federal partnership. As Gallup previously reported, the states that chose to expand Medicaid and set up their own health exchanges had a lower uninsured rate to begin with: 16.1% compared with 18.7% for the remaining states. The already notable gap between the two groups of states widened through the first quarter to 4.3 points, as states that have implemented these core mechanisms of the ACA reduced their uninsured rates three times more than states that did not implement these core mechanisms. These data, collected as part of the Gallup-Healthways Well-Being Index, are based on respondents' self-reports of health insurance status based on the question, "Do you have health insurance coverage?"
  • On August 5, 2014, OIG released a report entitled “Part D Beneficiaries With Questionable Utilization Patterns for HIV Drugs”. The Inspector General based this study on an analysis of Prescription Drug Event records for HIV drugs in 2012. Part D sponsors submit one record to CMS for each drug that is dispensed to a beneficiary enrolled in their plans. Each record contains information about the drug, beneficiary, pharmacy, and prescriber. OIG developed six measures to identify beneficiaries with questionable utilization patterns on the basis of results of past OIG analyses and fraud investigations and on input from CMS staff. The report shows that Medicare Part D paid $2.8 billion for HIV drugs in 2012. Almost 1,600 Part D beneficiaries had questionable utilization patterns for HIV drugs. These beneficiaries had no indication of HIV in their Medicare histories, received an excessive dose or supply of HIV drugs, received HIV drugs from a high number of pharmacies or prescribers, or received contraindicated drugs (i.e., HIV drugs that should not be used in combination with one another). In total, Medicare paid $32 million for HIV drugs for these beneficiaries. While some of this utilization may be legitimate, OIG said, all of these patterns warrant further scrutiny. OIG recommend that CMS (1) expand sponsors' drug utilization review programs, (2) expand the Overutilization Monitoring System to include additional drugs susceptible to fraud, waste, and abuse, (3) expand sponsors' use of beneficiary-specific controls, (4) restrict certain beneficiaries to a limited number of pharmacies or prescribers, (5) limit the ability of certain beneficiaries to switch plans, (6) increase monitoring of beneficiaries' utilization patterns, and (7) follow up on questionable utilization patterns. CMS concurred with all but the second and fifth recommendations.
  • On August 5, 2014, OIG released a report entitled “The Centers for Medicare & Medicaid Services Provided Medicare Part D Coverage to Beneficiaries Confined in Mental Health Facilities for Court-Ordered Purposes”. While performing a separate review of Medicare Part D prescription drug payments made on behalf of beneficiaries incarcerated in correctional facilities (incarcerated beneficiaries), OIG observed that although Part C (i.e., Medicare Advantage) and Part D requirements generally prohibit benefits paid on behalf of incarcerated beneficiaries, the requirements allow benefits paid on behalf of beneficiaries confined in mental health facilities (State hospitals, Institutions for Mental Diseases, psychiatric hospitals, or hospital psychiatric units) by court order under a penal code. In contrast, Medicare’s traditional fee-for-service program (Part A and Part B) generally does not pay benefits on behalf of incarcerated or confined beneficiaries. Because of this inconsistent policy, OIG evaluated the impact on Part D of providing coverage to confined beneficiaries. The objective of this review was to evaluate the impact of CMS accepting prescription drug event (PDE) records submitted by sponsors for prescription drugs on behalf of confined beneficiaries under the Part D program during calendar years (CYs) 2006 through 2011. OIG found that CMS accepted PDE records with gross drug costs, totaling $12,641,770, submitted by Part D sponsors on behalf of 1,388 confined beneficiaries during CYs 2006 through 2011. Had those same persons been enrolled in Medicare Parts A or B, payment for Parts A or B services would generally not have been made. This occurred because CMS policy permits Medicare payments to be made on behalf of confined beneficiaries enrolled in Part D but not on behalf of those enrolled in Part A or Part B. OIG recommended that, to be consistent with the relevant provisions of Medicare Part A and Part B, CMS revise the Manual to prohibit Part D payments made on behalf of confined beneficiaries.


  • On August 4, 2014, HHS announced that it awarded $106.7 million in FY 2014 grant awards to 46 states, the District of Columbia, and five jurisdictions as part of the Maternal, Infant, and Early Childhood Home Visiting Program (Home Visiting Program) established by the ACA. These funds will allow states to continue and expand voluntary, evidence-based home visiting services to women during pregnancy and to parents with young children up to age five. More information may be found here.
  • On August 4, 2014, CMS announced that the agency will restart the Recovery Audit Contractor (RAC) program in August following a two-month hiatus. The announcement, available here, states, “Due to the continued delay in awarding new Recovery Auditor contracts, the CMS is initiating contract modifications to the current Recovery Auditor contracts to allow the Recovery Auditors to restart some reviews. Most reviews will be done on an automated basis, but a limited number will be complex reviews of topics selected by CMS. Work continues on the procurement process for the four Part A / Part B Regions and the national DMEPOS/HH&H Region. The CMS remains hopeful that the new round of Recovery Auditor contracts will be awarded this year.”
  • On August 5, 2014, CMS announced the start of a demonstration to evaluate the benefits of providing payment for items and services needed for the in-home administration of intravenous immune globulin for treatment of primary immune deficiency disease (PIDD). This is a three year demonstration and will enroll up to 4,000 Medicare beneficiaries nationwide. The statute authorizes up to $45 million to pay for services and costs to administer this demonstration. In addition, the statute mandates an independent evaluation and Report to Congress on the demonstration. A fact sheet may be found here. More information may be found here.
  • On August 6, 2014, CMS released the comments it received in response to a December 2013 Request for Information (RFI) that sought input on a second round of applications for the Pioneer Accountable Care Organization (ACO) model, and new ACO models that encourage greater care integration and financial accountability. The responses may be found here.
  • On August 6, 2014, HHS Secretary Sylvia Mathews Burwell announced her appointment of Jackie Cornell-Bechelli as Region II Director of HHS. "I am delighted to welcome Jackie Cornell-Bechelli to our team of regional directors at HHS,” said Secretary Burwell. “Jackie is a devoted public servant, and I look forward to her work helping people in New York, New Jersey, Puerto Rico, and the U.S. Virgin Islands secure the building blocks they need to live healthy, successful lives.” As a regional director, Cornell-Bechelli will serve as a key representative of Secretary Burwell in working with federal, state, territorial, local, and tribal officials on health and social service issues, including implementation of the ACA. The Region II office is based in New York City, and works with officials in New York, New Jersey, Puerto Rico, and the U.S. Virgin Islands.
  • On August 8, 2014, CMS announced that enrollment in Medicaid and the Children’s Health Insurance Program is continuing to steadily grow under the health law, with an added 602,210 people signing up in June. The agency’s June 2014 enrollment figures may be accessed here.

This advisory is published by Alston & Bird LLP’s Health Care practice area to provide a summary of significant developments to our clients and friends. It is intended to be informational and does not constitute legal advice regarding any specific situation. This material may also be considered attorney advertising under court rules of certain jurisdictions.

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