Category — Centers for Medicare & Medicaid Services

On August 23, 2011, the Center for Medicare & Medicaid Innovation (Innovation Center) announced a new initiative regarding bundled payments for care improvement.  The new bundled payment models combine payments for physician, hospital, and other provider services into a single, predetermined payment amount for all services furnished to a beneficiary during a defined episode of care.  The Innovation Center offers four different payment models for interested applicants.  Akin Gump has put together a Comparison of Bundled Payment Models Chart comparing some of the features of each of these models.  Further detail is available in the full request for applications (RFA), available at the Innovation Center website: http://innovations.cms.gov/documents/payment-care/Request_for_Applications.pdf.

Important Dates

Entities interested in applying for any of these models should note the following program deadlines:

Model 1

• Interested organizations must submit a non-binding letter of intent by September 22, 2011
• Applications must be submitted to the Innovation Center by October 21

Models 2-4

• Interested organizations must submit a non-binding letter of intent by November 4, 2011
• Organizations who want to be considered for receipt of data must submit a Research Request Packet containing specific information about their study design (including how they will use data to construct an episode definition and develop care episode redesign protocols) by November 4, 2011
• Potential applicants must also submit a Data Use Agreement by November 4, 2011
• Applications must be submitted by March 15, 2012

Today, April 7, 2011, the Centers for Medicare & Medicaid Services (CMS) published the proposed rule on the Medicare Shared Savings Program/Accountable Care Organizations (ACOs).  In addition, CMS and the Office of Inspector General published the notice with comment period regarding waiver designs in connection with the Medicare Shared Savings Program.  Both documents are available in today’s Federal Register.

An analysis of the Medicare Shared Savings Program/ACO proposed rule can be found here and for more information on the ACO fraud and abuse waivers notice, please click here.

On March 31, 2011, the Centers for Medicare & Medicaid Services (CMS or the “Agency”), along with several other federal agencies, released a long-awaited proposed rule and other notices that would implement the Medicare Shared Savings Program and Accountable Care Organization (ACO) provisions of the Patient Protection and Affordable Care Act (PPACA). The proposed ACO regulations and policies are contained in four separate documents: (1) a CMS proposed rule establishing ACOs; (2) a Department of Health and Human Services Office of Inspector General/CMS notice with comment period proposing waivers for the Anti-Kickback Statute, the Physician Self-Referral Law (the “Stark Law”) and certain provisions of the Civil Monetary Penalties law; (3) a Federal Trade Commission/Department of Justice proposed statement of antitrust enforcement policy for ACOs; and (4) an Internal Revenue Service request for comments addressing guidance for tax-exempt organizations participating in the program. This health reform update gives a preliminary analysis of CMS’s proposed rule. The other three publications are reviewed in separate updates prepared by members of Akin Gump’s ACO team.

Although the CMS proposed rule has only been issued in draft form, publication in the Federal Register is expected on or around April 7, 2011. Comments on the rulemaking must be submitted to CMS within 60 days of publication.

Health industry stakeholders highly anticipated the release of this rule and early CMS estimates indicate that 1.5 to 4 million beneficiaries would be assigned to ACOs in the first three years of the program (as compared to 45 million beneficiaries who have traditional fee-for-service (FFS) Medicare coverage). This estimate reflects only those enrolled in the Medicare Shared Savings Program; additional individuals are anticipated to be enrolled in commercial and Medicaid ACOs. In press conferences and releases surrounding the announcement of the proposed rule, CMS appears confident that the ACO Shared Savings Program will incent providers to furnish coordinated and efficient care and ultimately lower costs throughout the health care delivery system. Summarized below are some noteworthy takeaways from the ACO proposed rule.

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On March 31, 2011, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule establishing accountable care organizations (ACOs) under the Medicare Shared Savings Program pursuant to provisions of the Patient Protection and Affordable Care Act (PPACA). CMS and the Department of Health and Human Services (HHS) Office of Inspector General (OIG) also jointly released a notice and solicitation of public comments (the Notice) regarding the waiver of certain federal fraud and abuse laws in connection with the Medicare Shared Savings Program.

Anticipating that the Medicare Shared Savings Program would potentially implicate fraud and abuse laws, Congress included a provision in the PPACA that grants the Secretary of HHS the authority to waive the application of certain fraud and abuse laws “as may be necessary” to implement the program. [1]   The fraud and abuse laws addressed by the proposed waivers are the Physician Self-Referral Law (the “Stark Law”),[2] the federal Anti-Kickback Statute,[3] and a provision of the Civil Monetary Penalties law (CMP Law), the so-called Gainsharing CMP, that prohibits a hospital from making a payment directly or indirectly to induce a physician to reduce or limit services to Medicare and Medicaid beneficiaries.[4] Industry stakeholders have expressed concerns that without such waivers the establishment and operation of ACOs would necessarily involve the creation of financial relationships between physicians and hospitals and other individuals and entities that would otherwise be restricted or prohibited by these laws.

The Notice sets forth three proposed waivers and solicits comments on a number of related issues. To be eligible for waivers from the fraud and abuse laws, an ACO must enter into a formal agreement with CMS to participate in the Medicare Shared Savings Program and the ACO, ACO participants and ACO providers/suppliers would be required to comply with the various ACO requirements found in Section 1899 of the Social Security Act[5] (as promulgated by the PPACA) and the ACO implementing regulations, including the requirements regarding transparency, reporting and monitoring.

The requirements for the proposed waivers are set forth below—

Today, several federal agencies issued proposed rules or notices regarding Accountable Care Organizations (ACOs)— 

• CMS issued a proposed rule that establishes ACOs under the Medicare Shared Savings Program.
• HHS OIG and CMS jointly issued a notice with comment period addressing proposals for waivers for the anti-kickback statute, the physician self-referral law and certain provisions of the civil monetary penalty law, as related to the Shared Savings Program.  They also issued a solicitation for comments on additional waivers for program as well as for separate waiver authority for the Center for Medicare and Medicaid Innovation.
• FTC and DOJ jointly issued a proposed antitrust policy statement for ACOs participating in the Shared Savings Program.
• The IRS issued a request for comments addressing guidance for tax-exempt organizations participating in the Shared Savings Program through ACOs. 

Recent rulemakings and comments from a Centers for Medicare & Medicaid Services (CMS) official provide clues as to how Medicare and Medicaid providers will be required to implement mandatory compliance programs as required under the Patient Protection and Affordable Care Act (PPACA).

As most in the health industry are aware, PPACA includes two separate provisions mandating compliance programs for Medicare and Medicaid providers, generally, and for nursing facilities, specifically.  PPACA § 6401, which applies to all Medicare and Medicaid providers, requires the secretary of the Department of Health and Human Services (HHS) to promulgate “core elements” and set an effective date for compliance programs, presumably through rulemaking, but does not set a deadline for these actions.  This provision also did not provide detailed guidance on the core elements of a mandatory compliance program.  PPACA Section § 6102 applies to Medicare skilled nursing facilities and Medicaid nursing facilities and sets forth eight core elements of a mandatory compliance program.[1]  In a September 2010 proposed rule, HHS indicated that compliance program core elements under PPACA § 6401 will most likely be similar to the core elements for nursing facilities and to the elements of effective compliance described in the U.S. Federal Sentencing Guidelines Manual.  In that proposed rule, HHS also requested suggestions for compliance program elements and comments on the costs and benefits of compliance programs or operations as well as on a reasonable timeline for establishment of a required program.

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Consistent with its annual regulatory cycle, CMS issued the 2011 final  Medicare Physician Fee Schedule (PFS) and Outpatient Prospective Payment System (OPPS) rules on November 2, 2010.  The rules will be published in the Federal Register on November 29, 2010.  The final rules implement key elements of health care reform legislation, as well as other changes to physician and OPPS payment for the coming year.

Two key issues dominate discussions of the 2011 final PFS: 1) the implementation of certain health care reform provisions; and 2) the impact of the Sustainable Growth Rate (SGR) payment adjustment.  Additionally, the 2011 final PFS rule addresses the following important areas:

• codes and reimbursement rates for all Medicare Part B physician services;
• changes to the Medicare Economic Index (MEI) and Geographic Practice Cost Index (GPCI) methodology;
• Medicare Part B payments for drugs and drug administration services;
• the Physician Quality Reporting System (PQRS), formerly called the Physician Quality Reporting Initiative (PQRI); and
• the Electronic Prescribing (E-Prescribing) Incentive Program.

The final OPPS rule implements the following key health care reform provisions:

• Provides reductions to the OPPS market basket update
• Establishes the following conditions for Medicare reimbursement:
  • Community mental health centers (CMHCs) must have a minimum percentage (40%) of non-Medicare patients, and
  • CMHCs and hospitals cannot provide home care services through partial hospitalization programs
  • Eliminates beneficiary cost-sharing for certain Medicare-covered preventive services
  • Establishes a floor on the wage index adjustment to payments for hospital outpatient services furnished in certain designated states (Montana, Nevada, North Dakota, South Dakota and Wyoming)
  • Authorizes the redistribution of unused medical residency positions for purposes of determining Medicare payment and permits time spent in non-patient activities to count toward the determination of full-time equivalency (FTE) for graduate medical education (GME) and indirect medical education (IME) payment purposes
  • Limits physician referrals to a hospital where the physician has an ownership or investment interest

The Centers for Medicare & Medicaid Services issued a proposed rule (and correction) on November 10, 2010 to implement several changes to the Medicare Advantage (“MA”) program under the Patient Protection and Affordable Care Act.  Among other provisions, the proposed rule would clarify CMS’s authority to negotiate plan bids, limit MA beneficiary cost-sharing requirements, and specify dispensing practices for prescription drugs in long-term care facilities, and update the methodology for using quality ratings to determine MA bonus payments.  CMS expects to publish a final rule in spring 2011.  More information about the demonstration project is available on the CMS website.

On November 10, 2010, the Centers for Medicare & Medicaid Services published a Notice in the Federal Register soliciting comments on Accountable Care Organizations.  The Notice specifically requests that interested parties comment on various areas including the following:

• Policies to ensure that solo and small practice providers may participate in ACOs;
• Beneficiary attribution to the ACO;
• Methods to assess beneficiary experience within the ACO;
• Patient-centeredness criteria for assessment of ACOs;
• Quality measures that should be used in the ACO program; and
• Other payment methodologies should be tested through the Centers for Medicare & Medicaid Innovation

Comments must be submitted to the agency by December 3, 2010.

On Thursday, September 23, 2010, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule outlining how it intends to implement several of the new anti-fraud measures called for under PPACA.  According to CMS Administrator Donald Berwick, these measures are part of the government’s efforts to take a proactive approach to fraud prevention, by preventing improper payments before they are made as opposed to seeking to recoup monies improperly paid.  The proposed rule addresses the following measures:

• Screening for new providers and suppliers, including licensure checks, database checks, unannounced site visits, and, for “high risk” entities such as certain home health providers and durable medical equipment suppliers, criminal background checks;
• $500 application fee for institutional providers;
• Six-month moratorium on enrollment where necessary; and
• Suspension of payments pending “credible” allegations of fraud, which could include complaints to CMS, the Department of Health and Human Services Office of Inspector General, or other law enforcement.

Under PPACA, these new measures are scheduled to take effect March 23, 2011, and will apply to new provider and supplier applicants, as well as renewal applicants.  CMS is accepting comments on the proposed rule through November 16, 2010.