Health Care Week in Review November 1, 2014

A&B Healthcare Week in Review, November 1, 2014

Alston & Bird


  • On October 31, 2014, the Centers for Medicare and Medicaid Services (CMS) released a final rule with comment period entitled “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: CMS-Identified Overpayments Associated with Submitted Payment Data”. This final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for calendar year (CY) 2015 to implement applicable statutory requirements and changes arising from the agency’s continuing experience with these systems. In this final rule with comment period, CMS describes the 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 final rule with comment period updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program. In this document, CMS also makes changes to the data sources permitted 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 formal process, including a three-level appeals process, to recoup overpayments that result from the submission of erroneous payment data by Medicare Advantage (MA) organizations and Part D sponsors in the limited circumstances in which the organization or sponsor fails to correct these data. CMS also released fact sheets on quality reporting program changes and policy and payment changes in the rule. This final rule with comment period is effective January 1, 2015. Comments are due December 30, 2014.
  • On October 31, 2014, CMS released a final rule entitled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies”. This final rule will update and make revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for CY 2015. This rule also finalizes requirements for the ESRD quality incentive program (QIP), including for payment years (PYs) 2017 and 2018. In addition, this final rule sets 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); makes alternative payment rules for certain DME under the Medicare DMEPOS CBP; clarifies the statutory Medicare hearing aid coverage exclusion and specifies devices not subject to the hearing aid exclusion; will not update the definition of minimal self-adjustment; clarifies the Change of Ownership (CHOW) and provides for an exception to the current requirements; revises the appeal provisions for termination of a CBP contract, including the beneficiary notification requirement under the Medicare DMEPOS CBP, and makes a technical change to the regulation related to the conditions for awarding contracts for furnishing infusion drugs under the Medicare DMEPOS CBP. A fact sheet addressing the policies CMS is finalizing for the ESRD QIP, including for CYs 2017 and 2018, may be found here. A separate fact sheet addressing the payment provisions of the ESRD PPS and related DME provisions for CY 2015 may be found here.
  • On October 31, 2014, CMS released a final rule with comment period entitled “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”. This final rule with comment period addresses changes to the physician fee schedule, and other Medicare Part B payment policies to ensure that CMS’ payment systems are updated to reflect changes in medical practice and the relative value of services, as well as changes in the statute. CMS also issued separate fact sheets on changes to quality reporting programs and changes to the physician value-based payment modifier. The provisions of this final rule are effective on January 1, 2015, with the exception of amendments to parts 412, 413, and 495 which are effective October 31, 2014. Comments are due December 30, 2014.
  • On October 30, 2014, CMS released a final rule entitled “Home Health Prospective Payment System Rate Update, CY 2015; Home Health Quality Reporting Requirements; and Survey and Enforcement Requirements for Home Health Agencies”. This final rule updates Home Health Prospective Payment System (HH PPS) rates, including the national, standardized 60-day episode payment rates, the national per-visit rates, and the non-routine medical supply (NRS) conversion factor under the Medicare prospective payment system for home health agencies (HHAs), effective for episodes ending on or after January 1, 2015. As required by the Affordable Care Act (ACA), this rule implements the second year of the four-year phase-in of the rebasing adjustments to the HH PPS payment rates. This rule provides information on CMS’ efforts to monitor the potential impacts of the rebasing adjustments and the ACA-mandated face-to-face encounter requirement. This rule also implements: changes to simplify the face-to-face encounter regulatory requirements; changes to the HH PPS case-mix weights; changes to the home health quality reporting program requirements; changes to simplify the therapy reassessment timeframes; a revision to the Speech-Language Pathology (SLP) personnel qualifications; minor technical regulations text changes; and limitations on the reviewability of the civil monetary penalty provisions. Finally, this rule also discusses Medicare coverage of insulin injections under the HH PPS, the delay in the implementation of the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM), and a HH value-based purchasing (HH VBP) model. In the rule, CMS projects that Medicare payments to home health agencies in CY 2015 will be reduced by 0.30 percent, or $60 million. This decrease reflects the effects of the 2.1 percent home health payment update percentage ($390 million increase) and the second year of the four-year phase-in of the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates, and the non-routine medical supplies (NRS) conversion factor (2.4 percent or $450 million decrease). The rule implements increases to the national per-visit payment rates, a 2.82 percent reduction to the NRS conversion factor, and a reduction to the national, standardized 60-day episode rate of $80.95 for CY 2015. The national, standardized 60-day episode payment for CY 2015 is $2,961.38.These regulations are effective on January 1, 2015. A fact sheet on the rule may be found here.
  • On October 27, 2014, CMS announced the establishment of an Advisory Panel on Clinical Diagnostic Laboratory Tests, and requested nominations for individuals to serve on the panel. The Panel will provide input to the Department of Health and Human Services (HHS) Secretary and the Administrator of CMS on the following: 1) the establishment of payment rates under section 1834A of the Social Security Act for new clinical diagnostic laboratory tests, including whether to use cross-walking or gap-filling processes to determine payment for a specific new test; and 2) the factors used in determining coverage and payment processes for new clinical diagnostic laboratory tests. In addition, the Panel will provide recommendations to the Secretary and the Administrator of CMS under section 1834A of the Act. The Panel will consist of up to 15 individuals with expertise in issues related to clinical diagnostic laboratory tests, which may include representatives of clinical laboratories, molecular pathologists, clinical laboratory researchers, and individuals with expertise in clinical laboratory science or economics of clinical laboratory services. Such issues may include the development, validation, performance, safety, and application of such tests. Nominations are due November 26, 2014.
  • On October 27, 2014, the Food and Drug Administration (FDA) announced the availability of draft guidance for industry entitled “Qualification for the Use of Galactomannan in Serum and Bronchoalveolar Lavage Fluid”. This draft guidance provides recommendations on the use of Galactomannan detection in serum and/ or bronchoalveolar lavage (BAL) fluid as the sole microbiological criterion to classify patients as having probable invasive Aspergillosis (IA) for enrollment in clinical trials. This draft guidance provides the context of use for which this biomarker drug development tool (DDT) is qualified through the Center for Drug Evaluation and Research (CDER) DDT Qualification Program. In the Federal Register of January 7, 2014, FDA announced the availability of a guidance for industry entitled ‘‘Qualification Process for Drug Development Tools,’’ which described the process that would be used to qualify DDTs and to make new DDT qualification recommendations available on FDA’s Web site. The qualification recommendations in this draft guidance were developed using the process described in that guidance. Comments on the draft guidance are due December 26, 2014.More information may be found here.
  • On October 27, 2014, the Department of Veterans Affairs (VA) issued an interim final rule, “Copayments for Medications in 2015”, amending its medical regulations concerning the copayment required for certain medications. But for this rulemaking, beginning on January 1, 2015, the copayment amount would increase based on a formula set forth in regulation. The maximum annual copayment amount payable by veterans would also increase. This rulemaking freezes copayments for 2015 at the current rate for veterans in priority categories 2 through 8, and thereafter resumes increasing copayments in accordance with the regulatory formula. This rule is effective on October 27, 2014. Comments are due December 26, 2014.
  • On October 29, 2014, the HHS Office of Inspector General (OIG) announced an extension of the public comment period for the OIG Federal Register notice published on July 11, 2014 (79 FR 40114). The notice solicited input from the public on revising the criteria used by OIG in implementing its permissive exclusion authority under Section 1128(b)(7) of the Social Security Act. Due to a technical problem, the public may have been unable to submit comments at during the comment period. Accordingly, OIG is extending the comment period to ensure that the public has an opportunity to provide input. To ensure consideration, public comments are due December 29, 2014.
  • On October 27, 2014, the United States Preventive Services Task Force (USPSTF) released a draft recommendation on screening for thyroid dysfunction for public comment. The Task Force gives the screening an “I” rating, meaning the group concluded that there is insufficient evidence to assess the balance of benefits and harms of screening in non-pregnant, asymptomatic adults. Comments on the draft recommendation are due November 24, 2014, and may be submitted here.
  • On October 29, 2014, FDA announced that an information collection entitled “Adverse Experience Reporting for Licensed Biological Products; and General Records” had been submitted to OMB for review. Comments on the proposal are due November 28, 2014.
  • On October 31, 2014, CMS released a notice announcing a modified System of Records (SOR), entitled ‘‘Chronic Condition Data Repository (CCDR), System No. 09–70– 0573’’ last published at 71 FR 54495, September 15, 2006. More information may be found here.

Event Notices

  • November 12, 2014: The Substance Abuse and Mental Health Services Administration (SAMHSA) announced that it will hold a public listening session on Wednesday, November 12, 2014, to solicit information concerning the Criteria for Certified Community Behavioral Health Clinics (CCBHC) to participate in Demonstration Programs. The scheduled listening session provides an opportunity for SAMHSA to seek public input on the criteria development process. The scope of this session will be on the development of the Criteria only. The session will be held in Rockville, MD, to obtain direct input from stakeholders on the development of criteria for state certification of Community Behavioral Health Clinics. More information may be found here.
  • November 12-13, 2014: The Centers for Disease Control and Prevention (CDC) has announced the next meeting of the Advisory Committee to the Director (ACD) Health Disparities Subcommittee. The meeting will be held November 12th and 13th in Atlanta, Georgia, and will be available by teleconference. The Health Disparities Subcommittee members will discuss progress-to-date in accomplishing the health equity recommendations approved by the CDC ACD; updates on health disparities training for the public health workforce, and collaborations with the State, Tribal, Local, and Territorial Subcommittee to the ACD. More information may be found here.


U.S. Senate

  • The Senate is not in session. More information about the Senate schedule may be found here. Both chambers of Congress are expected to return to session on November 12th.

House of Representatives

  • The House is not in session. More information about the House schedule may be found here. Both chambers of Congress are expected to return to session on November 12th.


  • On October 29, 2014, Avalere Health released an analysis regarding the potential impact of 2014 governors’ races on Medicaid expansion prospects. Avalere reports that Democratic gubernatorial candidates in Florida, Georgia, Kansas, Maine, and Wisconsin, along with an Independent in Alaska, could pursue an expansion if elected. While Republican candidates are reticent to discuss the possibility of Medicaid expansion during a campaign, 10 states with Republican governors have already expanded, and some new Republican governors could support expansion once in office. Several states already expanding Medicaid could also see a shift in gubernatorial control beginning in 2015, the brief explains. Most notably, Arkansas and Pennsylvania – two states expanding Medicaid under alternative expansion plans – could see new parties take control of the governor’s mansion. Arkansas is in the midst of updating its landmark expansion waiver, and Pennsylvania is scheduled to implement an alternative expansion in 2015.
  • study published in the New England Journal of Medicine (NEJM) this week examined spending and quality measures during the first four years of the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract (AQC). Authors compared spending and quality among enrollees whose physician organizations entered the AQC from 2009 through 2012 with those among persons in control states, analyzing spending changes according to year, category of service, site of care, experience managing risk contracts, and price versus utilization. The article concludes that compared with similar populations in other states, Massachusetts AQC enrollees had lower spending growth and generally greater quality improvements after 4 years. Although other factors in Massachusetts may have contributed, particularly in the later part of the study period, the study finds that global budget contracts with quality incentives may encourage changes in practice patterns that help reduce spending and improve quality.


  • The Federally-Facilitated Small Business Health Options Program (SHOP) Marketplace Early Access launched Monday in Delaware, Illinois, Missouri, New Jersey and Ohio. “SHOP Early Access” allows small businesses, agents, and brokers to try out new online pre-enrollment SHOP features, and help set the stage for the full online debut on November 15. The new features allow small businesses to establish a Marketplace SHOP account, assign a SHOP agent/broker to their account, complete an employer SHOP eligibility application, obtain an eligibility determination from the FF-SHOP, and upload an employee roster. Employers will also be able to browse 2015 SHOP plans and pricing as soon as these are available in November, allowing them to decide which plans to offer their employees for this round of Open Enrollment. More information may be found here.
  • On October 28, 2014, the National Association of Medicaid Directors (NAMD) issued a letter to the leaders of the Senate Finance, Senate Health, Education, Labor and Pensions (HELP), House Ways and Means, and House Energy and Commerce Committees regarding pricing challenges related to expensive breakthrough specialty drugs such as new Hepatitis C treatments Sovaldi and Harvoni. In the letter, the Association urges the federal government to either control the price of specialty drugs, or help states pay for them. “This situation requires an immediate federal solution”, the letter reads. “Policymakers must begin developing a new framework for conceptualizing the comprehensive costs and value associated with highly effective treatments in public health insurance programs, including Medicaid. In this process, policymakers and the public must also be realistic about the choices and trade-offs involved when taxpayer dollars are used to fund high-cost services and products”.
  • On October 28, 2014, CMS issued a letter to NAMD and the American Public Human Services Association announcing that the government will permanently pay 90 percent of the costs for technological upgrades to enrollment and eligibility systems. In 2011, CMS released proposed and final regulations authorizing an enhancement to the Federal Medicaid matching rate for eligibility and enrollment systems modernization – increasing the level of Federal support from 50 percent to 90 percent for new systems builds and from 50 percent to 75 percent for maintenance and operations. In addition, OMB also offered a waiver of OMB Circular A87 cost allocation rules to support the integration of eligibility systems between health and human services programs, such as the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF). This waiver allowed States that wish to build integrated systems to do so without having to allocate the costs of developing shared eligibility services to human services programs. The majority of states have requested and received approval for the A87 waivers. This week’s announcement from CMS indicated that the agency will provide a three-year extension of the A87 waiver authority to enable states to complete their work on eligibility and enrollment systems integration through December 2018. In addition, CMS announced that it intends to issue new regulations that will codify the availability of the 90/10 federal matching funds for Medicaid eligibility and enrollment systems on a permanent basis. and enrollment systems on a permanent basis.
  • On October 29, 2014, the HHS Office of Medicare Hearings and Appeals (OMHA) held its second Medicare Appellant Forum (the first took place in February). The purpose of the forum was to provide updates to OMHA appellants on the status of OMHA operations, and to relay information on several OMHA initiatives designed to mitigate a growing backlog in the processing of Medicare appeals. During the meeting OMHA Chief Administrative Law Judge (ALJ) Nancy Griswold explained that the significant increase in requests for ALJ hearings over the past three years has made it difficult for the agency to achieve its statutory 90 day case processing requirement. She acknowledged the negative impact delays have on Medicare providers and beneficiaries, and insisted that OMHA is doing everything it can to mitigate the burden of delay. Representatives from CMS also spoke at the event. More information may be found here.
  • On October 30-31, 2014, the Medicaid and CHIP Payment and Access Commission (MACPAC) convened a series of meetings in Washington DC. The agenda included sessions on the future of CHIP; standards for access to care in Medicaid managed care; a framework for evaluating Medicaid provider payment policy; and policy issues concerning the Medicare savings programs. More information on the event may be found 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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