Last week the Centers for Medicare & Medicaid Services (CMS) announced significant policy changes for Medicare Advantage (MA) and Part D programs. On April 1, 2019, CMS released the calendar year 2020 Rate Announcement and Call Letter, and on April 5, 2019, CMS release the unpublished version of a final rule revising the MA and Part D program regulations for 2020 and 2021 (scheduled to be published April 16, 2019). These documents include many important policy changes for MA plans—including opportunities to offer broadened supplemental benefits packages and expanded telehealth services.

Supplemental Benefits for the Chronically Ill

Traditionally, CMS has interpreted section 1853(a) of the Social Security Act to allow MA plans to offer supplemental benefits (items or services not covered by original Medicare) when they are “primarily health related,” offered uniformly to all enrollees, and result in the MA plan incurring a non-zero direct medical cost. “Primarily health related” means an item or service that is “used to diagnose, compensate for physical impairments, acts to ameliorate the functional/psychological impact of injuries or health conditions, or reduces avoidable emergency and healthcare utilization.” For 2019, CMS introduced new flexibility into the uniformity requirement by allowing MA plans to offer supplemental benefits to some—but not all—vulnerable enrollees.
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The Centers for Medicare & Medicaid Services (CMS) recently proposed a rule to allow Medicare Advantage plans to expand telehealth benefit coverage. (See alert for more detail) This proposed rule implements the statutory provisions in section 50323 the Bipartisan Budget Act of 2018. What you might not know, however, is that the Bipartisan Budget Act of 2018 is only one of many legislative vehicles by which advocates for telehealth expansion have been able to move the needle definitively in their favor during this session of Congress.

Over the past two years, Congress has shown its support for the utilization of telehealth by introducing forty-one bills that, if passed, would require Medicare to reimburse providers for their use of telehealth to treat numerous health conditions such as stroke diagnosis, mental health, chronic care management and opioid addiction treatment. Of note, the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 was the predecessor bill that passed out of the Senate in September of 2017 and became law on February 9, 2018 as a part of the Bipartisan Budget Act of 2018.
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In its recent notice of proposed rulemaking setting policy for Medicare Advantage (MA) and the Prescription Drug Program (PDP) for calendar year 2020, CMS announced that it would establish extrapolation as a method to be used in risk adjustment validation (RADV) audits, and further, that it would not make any adjustments to account for errors in Medicare fee for service data in determining recovery amounts.

CMS uses a risk adjustment process to modify MA plan payments to better reflect the relative risk of each plan’s enrollees. Payments to each MA plan are adjusted based on risk scores that reflect enrollees’ health status (categorized into Hierarchical Condition Categories (HCCs)) and demographic characteristics derived from member claims data. To counteract incentives that a plan might have to over-report enrollee diagnoses, CMS emphasizes that all diagnoses submitted to enhance risk must be documented in a medical record, and uses RADV audits to ensure that medical record documentation exists, and thus, that payments to MAOs accurately reflect the level of risk assumed.
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In the most recent technical changes made to Part C and Part D plans for 2019, CMS codified the star ratings methodology in regulations. Now, CMS is proposing changes to these regulations, such as new definitions to clarify the meaning of terminology used in describing the star ratings methodology. In addition, CMS is proposing several changes to improve program quality and accessibility of the Medicare Advantage (MA) and Part D Prescription Drug Program (PDP) Plan Quality Rating for measures other than Consumer Assessment of Healthcare Providers and Systems (CAHPS).

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Building on momentum from Administrator Seema Verma’s announcement of the MyHealtheData initiative at HIMSS 2018, CMS has published more clues as to future action to liberate health information for patients.

In the CY 2019 call letter to Medicare Advantage organizations and Part D programs, CMS describes the Blue Button 2.0 project and its use of

On November 2, President Obama signed the Bipartisan Budget Act of 2015. As an offset for near-term increases in federal spending, the new law extends by one year – to 2025 – two-percent sequestration reductions in federal spending for mandatory federal programs including Medicare.  The end result is that Medicare Advantage Organizations (MAOs) can expect their capitated payments from Centers for Medicare and Medicaid Services (“CMS”) to continue to be reduced, and Medicare fee-for-service providers can also expect to have sequestration reductions on their CMS reimbursements until at least 2025.

First established by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), “sequestration” is a process of automatic, largely across-the-board reductions enacted to constrain federal spending. Sequestration in its current form began on March 1, 2013, when President Obama, pursuant to the Budget Control Act of 2011, ordered cuts to federal spending effective April 1, 2013, after Congress and the President failed to reach a budget compromise.

Under the Budget Control Act of 2011, the size of reductions to the Medicare program is limited to two-percent. As required by President Obama’s sequestration executive order, on March 8, 2013, CMS notified providers that a “2 percent reduction in Medicare payment[s]” would apply to “Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013.” In other words, due to sequestration, as of April 1, 2013, CMS reduced the amount it pays to providers for fee-for-service Medicare claims by two-percent.


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On April 17th, Crowell & Moring’s Government Affairs and Health Care Groups hosted speakers from Capitol Hill, federal agencies, and national trade groups during a thought-provoking half-day Long Term Care Policy Update forum (“LTC Forum”).  The LTC Forum was spearheaded by James Flood and Scott Douglas, who recently joined the firm from the Government Affairs division at Omnicare, a leader in the long-term pharmacy industry. 

The LTC Forum focused on overall policy affecting the long-term care industry, which the Centers for Medicare & Medicaid Services (CMS), the Department of Health and Human Services (HHS) Office of the Inspector General (OIG), Congress, and other government agencies have consistently scrutinized.  Throughout the day, LTC Forum participants discussed the challenges and opportunities present in the long-term care industry that will only increase as payment reforms become the norm in Medicare. 

Of note, Sarah Johnson, the Legislative Assistant for U.S. Senator Rob Portman (R-OH) gave a timely overview of the negotiations that led up to the ultimate passage and signing of the Medicare Access and CHIP Reauthorization Act (MACRA).  MACRA repealed the Sustainable Growth Rate (SGR) formula for Medicare payments to physicians and phases in a new Merit-Based Incentive Payment System and other alternative payment models over the next ten years.  But MACRA partially funds these payment reforms with reductions to market basket updates for post-acute care providers, which creates increased concern from the industry about sustainability of long-term care providers under health reform initiatives.  According to one audience comment, there is concern that “in the long-term care industry, [stakeholders] are going to lose sight of overall health care industry shifts.”  


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This year Crowell & Moring’s Healthcare Ounce of Prevention Seminar, (HOOPS), will focus on important legal and regulatory developments and their impact on the healthcare industry. Join us on October 27th and October 28th in Washington, DC as our healthcare attorneys and outside speakers share their perspectives on the latest developments in areas of interest

The Office of Inspector General, Department of Health and Human Services, has recently issued guidance for those of its contractors seeking to self-disclose reportable conduct under the Federal Acquisition Regulations (“FAR”). Under federal regulations governing relationships between the federal government and its contractors, any contractors with credible evidence of a potential violation of the False Claims Act or federal criminal law involving fraud, bribery, gratuity, or conflict of interest must make a timely disclosure of such violations to the Office of Inspector General for the agency with which they contract. Failure to timely self-report these potential violations can result in the suspension of contracts or the debarment of the contractor. This requirement applies only to contractors whose contracts are governed by the FAR and which are valued at over $5,000,000.

The guidance details the information required to be included on the disclosure form, including the date the issue was discovered, detailed descriptions of any internal investigation undertaken, and a quantification of the financial harm to the government and any potential overpayments. In addition to the guidance, issued in April of 2014, OIG has provided FAQs for contractors covered by the FAR who may be considering a disclosure.


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Managed Care Lawsuit Watch is Crowell & Moring’s summary of key litigation affecting managed care. The latest issue covers a broad range of lawsuits, including: Medicare’s preemption of state common law negligence claims; arbitration clauses in provider agreements; the right of a Medicare Advantage plan to assert a lien on a deceased beneficiary’s negligence settlement;