Almost four years after publishing its proposed rule, the Centers for Medicare & Medicaid Services (CMS) released its final rule on February 1, 2016, pertaining to Medicaid reimbursement for covered outpatient drugs.  The finalized regulations implement provisions of the Affordable Care Act, and revise several key aspects of Medicaid program on drug rebates, and coverage

On December 2, 2015, CMS will publish a notice of proposed rulemaking for its Notice of Benefit and Payment Parameters for 2017 (“Proposed Rule”). The Proposed Rule articulates the federal government’s policy for health care coverage under Affordable Care Act programs and would make several notable changes, including stricter network adequacy requirements for qualified health

On November 16, 2016, CMS posted the final rule to implement the Comprehensive Care for Joint Replacement (CJR) model, which is a new Medicare payment model intended to hold acute care hospitals financially accountable for the quality and cost of a CJR episode of care and incentivize increased coordination of care among hospitals, physicians, and post-acute care providers. The regulations are effective on January 15, 2016, and applicable on April 1, 2016 when the first model performance period begins.

Under the CJR model, acute care hospitals in certain selected geographic areas will receive retrospective bundled payments for episodes of care for lower extremity joint replacement (LEJR) or reattachment of a lower extremity. An episode of care begins with an admission to a participant hospital of a beneficiary who is ultimately discharged under Medicare Severity-Diagnosis Related Group (MS-DRG) 469 (Major joint replacement or reattachment of lower extremity with major complications or comorbidities) or 470 (Major joint replacement or reattachment of lower extremity without major complications or comorbidities) and ends 90 days post-discharge in order to cover the complete period of recovery for beneficiaries. All related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries are included in the episode, except for certain exclusions.

Continue Reading CMS Issues Comprehensive Care for Joint Replacement (CJR) Model Final Rule

Every year, the Department of Justice (DOJ) and the Department of Health and Human Services Office of the Inspector General (OIG) report the results of their fraud prevention and recovery efforts to Congress.  As recounted in the recently released Health Care Fraud and Abuse Control Program (HCFAC) report, the overall amount recovered in FY 2014 was $1 billion less than what the agencies reported in 2013 ($4.3 billion).  Nevertheless, the report touted the $2 increase in the return on investment from DOJ and OIG’s fraud and abuse investigations overall (from $5.70 to $7.70).  The HCFAC report shows that, despite losing $62.1 million in funding beginning in FY 2013 due to sequestration, both DOJ’s and OIG’s antifraud work remains potent  and is growing more sophisticated.

Here is an overall comparison of the FY 2014 and FY 2013 reports:

DOJ Activities FY 2013 FY 2014
New Criminal Investigations 1,013 924
New Civil Investigations 1,083 782
Health Care Fraud Convictions 718 734
Total Allocation $573,667,581 $571,702,217
OIG Activities FY 2013 FY 2014
New Criminal Actions 849 924
New Civil Actions 458 529
Individuals Excluded from Federal Health Care Programs 3,214 4,017
Total Allocation $487,381,848 $485,824,633

Continue Reading FY 2014 HCFAC Report Shows Increasing DOJ and OIG Fraud-Fighting Efficiency

Through the announcement of its new “Next Generation ACO Model” (Next Gen Model) program on March 10, 2015, the Centers for Medicare & Medicaid Services is making good on its recently proclaimed goal to tie half of its fee-for-service Medicare payments to value-based payment methodologies by the end of 2018. The program name aptly describes it as the next step up from the Medicare Shared Savings Program (MSSP) and the Pioneer ACO Model initiatives already underway for ACOs. As with other ACO-focused initiatives administered by the federal government, the Next Gen ACO seeks to test shared savings and shared risk health care payment models, but will incorporate some significantly different features, such as: (1) a full capitation payment option beginning in 2017; (2) the option for beneficiaries to “self-align” with an ACO; and (3) direct-to-beneficiary rewards for receiving care from the ACO.

ACOs will have two opportunities to apply for the Next Gen Model – this year and in 2016. An ACO’s participation in the program will span over a total of five years consisting of three initial performance years and two optional one-year extensions.
Generally, the Next Gen Model’s participation prerequisites mimic the basic requirements applicable to applicants in the MSSP, such as the legal entity, governance structure, and ACO leadership body requirements. Like the Pioneer ACO Model, however, the Next Gen Model targets coordinated groups of providers that have more experience in managing the health of defined populations.

Some key differences to note when comparing the Next Gen Model to the MSSP and Pioneer ACO Model include the following:

Continue Reading Next Generation ACO Model Sets Tone for CMS’s Push Toward Value-Based Payment

After a protracted battle, Kaiser Foundation Health Plan, Inc. (Kaiser) recently settled a False Claims Act (FCA) qui tam case alleging that it falsely certified compliance with Medicare Advantage (MA) bidding instructions that relator claimed resulted in billions of dollars in damages to the United States. Crowell & Moring represented Kaiser in the litigation.

Kaiser’s former employee, Chris McGowan filed his initial complaint in 2009, but changed his theory of liability through a number of amendments as the case proceeded. Ultimately, he alleged that for its 2008 and 2009 MA bids Kaiser failed to comply with the CMS Office of the Actuary (OACT) “gain/loss margin” guidance directing that an MA plan’s proposed margin requirement be within a “reasonable range” of the margin requirements for its “other lines of business.” McGowan alleged that Kaiser’s certifications of compliance with MA bid instructions for 2008 and 2009 were false.

Continue Reading Settlement in FCA Qui Tam Case Disposes of Claims Alleging Falsely Certified Compliance with Medicare Advantage Rating Instructions

The last several weeks of 2014 brought with them a flurry of guidance from the Departments of Health and Human Services (“HHS”), Labor (“DOL”) and Treasury (collectively, the “Departments”) regarding group-health plan employee benefits issues, including issues under the Affordable Care Act (“ACA”), the Employee Retirement Income Security Act (“ERISA”) and the Mental Health Parity and Addiction Equity Act (“MHPAEA”). As we start into 2015, care should be taken not to overlook these important pieces of guidance that came in at years’ end:

1. No More “Skinny Plans”

On November 4, the Internal Revenue Service (“IRS”), in collaboration with HHS, issued guidance (Notice 2014-69) aimed at shutting the door on the use of so-called “skinny plans,” i.e., plans that provide “minimum value” within the meaning of the ACA, and which cover preventive services, but which exclude substantial hospitalization and/or physician services. (Some consultants have argued that such plans technically satisfied the ACA’s “minimum value” standard). The intent of such “skinny plans” is usually not to provide group health coverage, but to allow employers to partially or fully avoid application of any penalties under the ACA’s “pay or play” provisions (and a consequence of such actions is that employees covered under such “skinny plans” are generally ineligible for premium tax credits on ACA exchanges).

The IRS Notice unequivocally states that “plans that fail to provide substantial coverage for in-patient hospitalization services or physician services (or for both) . . . do not provide minimum value.” The Notice goes on to state that HHS and Treasury will amend the applicable regulations to incorporate this reading. The Notice gives limited grandfathering relief, protecting “skinny plans” adopted (through a binding written commitment) before November 4, 2014, but only as to plan years beginning on or before March 1, 2015 (regardless of such grandfathered coverage, employees offered affordable coverage under one of these plans can turn down such coverage and still be eligible for a premium tax credit on the exchanges). However, employers offering a “skinny plan” under this grandfathering provision must not state or imply that the plan precludes the employee from receiving a premium tax credit, and they must timely correct any disclosures to that effect that have previously been made.

2. Premium Reimbursement Plans

On November 6, the Departments issued additional FAQs (Part XXII) on ACA Implementation, specifically addressing premium reimbursement arrangements. The Departments clarified that an employer may not offer employees cash to reimburse the purchase of an individual market health policy, regardless of whether the cash is paid as taxable compensation or not. Any such reimbursement plan or arrangement would be considered by the Departments to be a “group health plan” within the meaning of ERISA and the Public Health Service Act (“PHSA”), and hence would be subject to the market reform provisions of the ACA. In keeping with prior guidance on integration of employer health care arrangements with individual coverage, the Departments stated that such a premium reimbursement plan fails to comply with the ACA’s market reforms because it could not be integrated with an individual market policy (and the reimbursement plan could not, on its own, satisfy the market reforms).

Continue Reading HHS, Labor, and Treasury Issue Flurry of Rulemakings and Guidance on Employee Benefits to Close 2014 with a Bang

On December 17, 2014, the Centers for Medicare and Medicaid Services (CMS) published on its website a Frequently Asked Questions (FAQs) on its Quality Rating System (QRS) and Qualified Health Plan (QHP) Enrollee Experience Survey for QHPs on the insurance exchanges. Section 1311(c)(3) of the Affordable Care Act (ACA) requires CMS to develop a system

States are on the front lines of health reform. The Affordable Care Act (ACA) acknowledged this by authorizing several grant programs for states to promote its implementation in addition to the many programs that already existed. Recently, the Department of Health and Human Services has awarded hundreds of millions of dollars in grants to states, territories, and other governmental entities to develop innovation programs, improve access to and quality of health care in rural areas, prevent and fight chronic diseases and promote effective rate review programs.

Innovation Grants

At the end of last year, the Centers for Medicare & Medicaid Services (CMS) announced awards of nearly $700 million in grants to states and territories. Pursuant to § 3021 of the ACA (42 U.S.C. § 1315a), these grants will fund state-level initiatives to design and test new and innovative models for health care payment and service delivery. Eleven states will receive portions of $622 million over the next four years to test innovation plans that are already fully designed. Another 17 states, three territories, and DC will receive a total of $42 million to design, refine, and submit their innovation plans to CMS over a period of 12 months. More information on these grants is available here.

These awards represent the second round of innovation grants to governmental entities under § 3021. More than two-thirds of states now have received innovation grants from the Center for Medicare & Medicaid Innovation (CMMI). Through fiscal year 2019, CMMI will continue to award and administer grants up to its $10 billion appropriation.

Access to Health Care in Rural Areas

Continue Reading Federal Funds, States, and Health Care Reform: Innovation and Opportunity in 2015

On December 12, 2014, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule that would broaden rights for same-sex spouses at US hospitals. The proposed rule is aimed at “ensur[ing] that same-sex spouses in legally-valid marriages are recognized and afforded equal rights in Medicare and Medicaid participating facilities.”

In its 2013 decision