backCMS Releases CY 2015 OPPS and ASC Proposed Rule – On July 3, 2014, CMS released the CY 2015 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule. In its proposal, CMS seeks, among other things, to increase OPPS payment rates by a factor of 2.1 percent, and CMS estimates a 1.2 percent net market basket update to ASC payments. Comments on the Proposed Rule must be received by 5:00 p.m. on Tuesday, September 2, 2014.
OPPS Payment Updates
CMS is proposing to increase OPPS payment rates by a factor of 2.1 percent. This figure represents a market basket increase of 2.7 percent, minus a multifactor productivity adjustment of 0.4 percent, and a 0.2 percent downward adjustment required by the Affordable Care Act. CMS estimates that the proposed changes would result in CY 2015 OPPS payments of approximately $56.5 billion, an increase of $5.2 billion compared to CY 2014 OPPS payments.
For outlier payments, CMS proposes that in order to be eligible for outlier payments, the cost of a service must exceed both the multiple threshold of 1.75 times the APC payment rate and the proposed fixed-dollar threshold of $3,100 over the APC payment rate. CMS proposes to continue to pay Part B drugs provided in outpatient departments at Average Sales Price (ASP) plus 6 percent for non-pass-through drugs and biologicals.
Comprehensive APCs
According to CMS, the Proposed Rule would continue the progress in transitioning the OPPS from what currently resembles a hybrid of a prospective payment system and a fee schedule to a more complete prospective payment system. CMS began this process in the CY 2014 OPPS/ASC Final Rule when it adopted a Comprehensive APC policy which expanded the categories of related items and services package into a single payment for a comprehensive primary service. In the CY 2014 Final Rule, CMS created 29 Comprehensive APCs to pay for high cost devices with a single payment. CMS delayed implementation of the policy until CY 2015. In the CY 2015 Proposed Rule, CMS is proposing several additional Comprehensive APCs, including some lower cost, device dependent APCs that were not proposed in CY 2014. Due to restructuring and consolidating some of the current device dependent APCs, CMS's Proposed Rule describes a total of 28 Comprehensive APCs for CY 2015 (compared to the 29 described in the CY 2014 OPPS/ASC Final Rule).
Conditional Packaging of Ancillary Services
CMS proposes changes to its current OPPS policy of paying separately for ancillary services that are supportive of a primary service. For CY 2015, CMS proposes the conditional packaging of all ancillary services assigned to APCs with a geometric mean cost of $100 or less. Proposed exceptions to the ancillary services packaging policy include preventive services, psychiatry-related services, and drug administration services. Ancillary services furnished by themselves would continue to be paid separately.
CMS Proposes to Abandon Two Midnight Physician Certification Requirement
One of the major changes developed in the FY 2014 Inpatient Prospective Payment System (IPPS) rulemaking cycle was a requirement that, as a condition of Medicare payment, physicians must certify to the medical necessity of inpatient services for all inpatient admissions. Although unrelated to outpatient hospital or ASC payments, the CY 2015 OPPS/ASC Proposed Rule proposes to revise the language in 42 C.F.R. § 424.13 to eliminate the physician certification requirement for inpatient stays except in the case of long stays (defined in the proposed rule as 20 days or longer) or cost outlier cases. Accordingly, a physician certification would not be required for all other inpatient stays. The CY 2015 OPPS/ASC Proposed Rule states that CMS will continue to require a written inpatient order as a condition of Medicare payment.
ASC Payment Update
For CY 2015, CMS proposes to increase payment rates under the ASC payment system by 1.2 percent. This proposal is based on projected Consumer Price Index-Urban Consumers (CPI-U) update of 1.7 percent minus the multi-factor productivity adjustment required by the Affordable Care Act that is projected to be 0.5 percent. CMS estimates that total payments to ASCs for CY 2015 will be approximately $4.1 billion, which represents an increase of $243 million over estimated CY 2014 payments.
Proposed Overpayment Recovery and Appeals Processes for Medicare Parts C and D
The Proposed Rule contains provisions establishing a formal process that would allow CMS to recoup overpayments that result from the submission of erroneous payment data by a Medicare Advantage (MA) organization or Part D sponsor when the organization or sponsor fails to correct those data voluntarily before payment reconciliation. In addition to the recoupment process, CMS is proposing a three-level appeals process for MA organizations and Part D sponsors to seek review of CMS's determination that the payment data submitted by the organization or sponsor was erroneous.
Data Collection Regarding Services Furnished in Off-Campus Provider-Based Departments
On January 1, 2015, CMS proposes to begin collecting information on the types and frequency of services furnished in off-campus provider-based departments. In order to track this data, CMS proposes to create a HCPCS modifier that would be reported with every code for physicians' services and outpatient hospital services furnished in an off-campus provider-based department of a hospital.
Quality Reporting Changes
CMS is seeking to remove a cardiac measure (OP-4: Aspirin at Arrival) and two prophylactic antibiotic measures (OP-6: Timing of Prophylaxis Antibiotics and OP-7: Prophylactic Antibiotic Selection for Surgical Patients) from the Hospital Outpatient Quality Reporting (OQR) Program. It also proposes adding one claims-based measure (OP-32: Facility 7-Day Risk Standardized Hospital Visit Rate after Outpatient Colonoscopy) for CY 2017 payment determination and subsequent years. CMS further proposes changing from required to voluntary reporting one chart-abstracted measure (OP-31: Cataracts – Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery). The latter two proposed changes would also be made to the ASC Quality Reporting Program (ASCQR), as CMS continues to propose measure alignment across the OQR and ASCQR programs.
CMS expects that the CY 2015 OPPS/ASC Final Rule will be issued around November 1, 2014.
To view the Proposed Rule, click here. To view CMS's Fact Sheet on the proposed policy and payment changes for OPPS and ASCs, click here.
Isabella Edmundson, Atlanta, +1 404 572 3527, iedmundson@kslaw.com.
CMS Releases CY 2015 MPFS Proposed Rule – On July 3, 2014, CMS released a Proposed Rule regarding payment policies under the Medicare Physician Fee Schedule (MPFS) for services furnished on or after January 1, 2015. Unless Congress intervenes, CMS estimates that the sustainable growth rate (SGR) formula will result in a 20.9 percent reduction in MPFS payment rates for CY 2015. Among other notable changes, CMS proposes a new process for establishing MPFS rates that will require that future changes go through notice and comment rulemaking process. The proposed process would require that changes to MPFS rates—except for new services never before valued under the MPFS—are only effective after CMS has responded to public comment. Comments on the Proposed Rule must be received no later than 5:00 p.m. on Tuesday, September 2, 2014.
Last year, CMS finalized a separate payment to begin in 2015 for managing, outside of a face-to-face visit, the healthcare of Medicare beneficiaries with two or more chronic conditions. The Proposed Rule offers details regarding implementation of the new chronic care management (CCM) policy, including proposed payment rates. Among other things, CMS is proposing a payment rate of $41.92 for the CCM code, which can be billed no more than once per month per qualified patient. CMS also seeks to provide greater flexibility in the supervision of clinical staff who provide CCM care. In this regard, CMS proposes to remove restrictions that services provided by clinical staff under general (rather than direct) supervision may be counted only if they are provided outside the practice's normal business hours. Thus, under the Proposed Rule, time spent by clinical staff providing aspects of CCM services could be counted toward the CCM time requirement irrespective of the time at which the services were performed, provided that the staff are under the general supervision of the practitioner and all "incident to" requirements set forth at 42 C.F.R. § 410.26 are met. CMS also proposes removing the requirement that clinical staff be directly employed by the practitioner or practitioner's practice in order for the time they spend in furnishing care to count toward the CCM time requirement.
In addition, the Proposed Rule seeks to change some of the quality reporting initiatives related to MPFS payments including the Physician Quality Reporting System, Medicare Shared Savings Program, and Medicare Electronic Health Record Incentive Program, as well as changes to the Physician Compare tool.
The Proposed Rule continues the implementation of the physician value-based payment modifier, established by the Affordable Care Act, that impacts payments to physicians and other eligible professionals, based on the cost and quality of care they provide to beneficiaries enrolled in the Medicare fee-for-service program.
As under the CY 2015 OPPS/ASC Proposed Rule, CMS also proposes in this CY 2015 MPFS Proposed Rule to begin collecting data on services furnished in off-campus provider-based departments beginning in 2015.
CMS is also proposing changes to reporting requirements under the "Open Payments (Sunshine Act)" program. CMS is proposing four changes:
- Deleting the definition of "covered device";
- Deleting the Continuing Education Exclusion;
- Requiring the reporting of the marketed name of the related covered and non-covered drugs, devices, biologicals, or medical supplies when the payment or other transfer of value is related to a particular covered item; and
- Requiring applicable manufacturers to report stocks, stock options or any other ownership interest as distinct categories.
Finally, among other things, the Proposed Rule seeks to update global surgery codes, add approximately 80 codes to CMS's list of potentially misvalued codes including codes that account for a high level of Medicare expenditures, propose new malpractice relative value units (RVUs), expand telehealth benefits to include annual wellness visits, psychoanalysis, psychotherapy, and prolonged evaluation and management services, and define screening colonoscopy to include anesthesia.
The Proposed Rule is scheduled to be published in the Federal Register on July 11, 2014. To view the Proposed Rule, click here. The CMS Fact Sheet on the CY 2015 MPFS Proposed Rule is available here.
Reporters, Katy G. Lucas, Atlanta, + 1 404 572 2822, klucas@kslaw.com and Lauren S. Gennett, Atlanta, + 1 404 572 3592, lgennett@kslaw.com.
CMS Releases CY 2015 ESRD PPS and DMEPOS Proposed Rule – On July 2, 2014, CMS released the CY 2015 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) and Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) Proposed Rule. CMS estimates that the proposed changes would result in a 0.3 percent increase in total payments to all ESRD facilities in CY 2015 as compared with CY 2014, but that total payments to rural facilities would be expected to decrease by 0.5 percent under the proposals. The expected decrease in payments to rural ESRD facilities is the result of proposed changes to revise and rebase the ESRD bundled market basket. The Proposed Rule also includes proposed changes to the ESRD Quality Incentive Program for Payment Years (PYs) 2017 and 2018 and proposed changes to the DMEPOS competitive bidding payment methodology. Comments on the Proposed Rule must be received by 5:00 p.m. on Tuesday, September 2, 2014.
According to CMS estimates, freestanding ESRD facilities would see a roughly 0.3 percent payment increase, while payments to hospital-based ESRD facilities would increase approximately 0.5 percent overall. Urban ESRD facilities should expect a payment increase of roughly 0.4 percent under the Proposed Rule. Payments to rural facilities, on the other hand, would be expected to decrease by 0.5 percent, and ESRD facilities in Puerto Rico and the U.S. Virgin Islands would expect to see a decrease of 3.6 percent in total payments.
The estimated decrease in payments to rural ESRD facilities appears to be driven largely by an increase in the labor-related share value, which CMS proposes to increase from 41.737 percent to 50.673 percent. Because of the negative effect this proposed change would have on payments to rural facilities, CMS proposes to phase in its implementation, with 50 percent of payments in CY 2015 being based on the old labor-related share, and 50 percent on the new labor-related share. By CY 2016, 100 percent of payments would be based on the new labor-related share.
The proposed increase in the labor-related share, in turn, is a result of CMS's proposal to rebase and revise the ESRD bundled market basket. CMS proposes to rebase the market basket using CY 2012 data to more accurately track the input costs of ESRD providers under the recently fully-implemented ESRD bundled payment system. (The existing market basket is based on data from CY 2008.) Due to the decline in drug utilization during the 2008 to 2012 period, concurrently with implementation of the bundled payment system, the CY 2012 data reflects a higher compensation cost share (and lower pharmaceutical cost share) than was previously the case. In addition to this rebasing proposal, CMS also proposes to revise the market basket by (1) changing the price measures for pharmaceuticals and supplies to more specific measures, and (2) updating the price measure for compensation costs to better reflect the occupational mix in the ESRD setting. Table 8 of the Proposed Rule (on page 67 of the display copy), displays the comparison between the CY 2008-based market basket and the proposed rebased CY 2012-based market basket.
CMS proposes to raise the ESRD outlier fixed-dollar loss amount for pediatric patients from $54.01 to $56.30, and increase the Medicare Allowable Payment (MAP) amount from $37.29 to $40.05. For adult patients, CMS proposes to lower the fixed-dollar loss amount from $98.67 to $85.24, and increase the MAP amount from $51.97 to $52.61.
The Proposed Rule also includes a number of revisions to the PY 2017 and PY 2018 ESRD Quality Incentive Program. For PY 2017, CMS proposes eight clinical measures and three reporting measures. With respect to the proposed clinical measures, one is new (the proposed Standardized Readmission Ratio measure), one has been revised (the National Healthcare Safety Network (NHSN) Bloodstream Infection in Hemodialysis Outpatients measure), and CMS proposes to remove one "topped out" measure (the Hemoglobin Greater than 12 measure). As for the reporting measures, CMS proposes that facilities will no longer be able to attest that they only had a single qualifying case to avoid being scored on the measure.
For PY 2018, CMS proposes eleven clinical measures and five reporting measures. CMS proposes to group the clinical measures for PY 2018 into three subdomains: (i) Safety, (ii) Patient and Family Engagement/Care Coordination, and (iii) Clinical Care. Each subdomain will comprise 20 percent, 30 percent, and 50 percent, respectively, of the total Clinical Measure Domain score. Among the proposed revisions to the reporting measures in PY 2018 are three new measures: (i) Pain Assessment and Follow-Up, (ii) Clinical Depression Screening and Follow-Up, and (iii) NHSN Healthcare Personnel Influenza Vaccination.
The Proposed Rule also includes a number of proposed changes to the DMEPOS payment methodology for CY 2015. Notably, CMS has proposed a methodology for using data gathered from the DMEPOS Competitive Bidding Program (CBP) to adjust the fee schedule prices for DME in regions of the country with no CBPs. For certain areas under the CBP, CMS proposes to phase in a system of monthly bundled payments (in replace of capped rental policies) to cover equipment costs, supplies, accessories, maintenance, and repair of certain equipment and devices furnished under the CBP, including enteral nutrition, oxygen, standard manual and power wheelchairs, hospital beds, continuous positive airway pressure devices, and respiratory assist devices. CMS also proposes an exception to the change of ownership rules that would permit a competitive bidding contract supplier to sell a distinct company that furnishes a specific product category or competitive bidding area.
The Proposed Rule is scheduled for publication in the July 11, 2014 Federal Register. The Proposed Rule is available here. The CMS Fact Sheet on the proposed payment update provisions included in the CY 2015 ESRD PPS Proposed Rule is available here. The Fact Sheet on the proposed quality measure updates is available here.
Reporter, Susan Banks, Washington, D.C., +1 202 626 2953, sbanks@kslaw.com.
CMS Releases Proposed HHA Rates for 2015 and Other Proposed Changes Affecting HHAs – On July 1, 2014, CMS released the proposed update to the Home Health Prospective Payment System (HH PPS) rates, which would apply to calendar year 2015 Medicare payments. As required by Section 3131(a) of the Affordable Care Act, the Proposed Rule implements the second year of the four-year phase-in of the rebasing adjustments. CMS estimates that the Proposed Rule will decrease overall payments to home health agencies (HHAs) by approximately 0.3 percent in calendar year 2015, which translates into a $58 million overall impact to HHAs. The changes would reduce the national, standardized 60-day episode payment amount by $80.95. Comments on the Proposed Rule must be received by 5:00 p.m. on Tuesday, September 2, 2014.
CMS also proposes updates to the home health wage index and a recalibration of the HH PPS case-mix weights for calendar year 2015. The home health wage index would be updated as outlined in a February 28, 2013 OMB bulletin, available here.
Other notable provisions set forth in the Proposed Rule include:
- Simplifying the face-to-face physician encounter rule based on industry efforts to eliminate the redundancies in the physician documentation of need.
- If adopted, the Proposed Rule would eliminate the narrative requirement in 42 C.F.R. § 424.22(a)(1)(v), but still require physician certification, as outlined in the Proposed Rule.
- CMS is also proposing to clarify that under sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Social Security Act, the face-to-face encounter requirement is applicable for certification (not recertifications), rather than initial episodes.
- Introducing possible new, restrictive coverage standards on insulin injection assistance. Although CMS did not propose any policy changes at this time, it solicits public comment on developing a comprehensive list of diagnosis codes that indicate when a patient may not be able to self-inject, and included a comprehensive discussion of the use of insulin pens.
- Unveiling a likely model for Value Based Purchasing for home health "with greater upside benefit and downside risk" to motivate HHAs to improve quality. If implemented, the model would begin in calendar year 2016.
- Limiting the discretion of judges to take downward deviations in Civil Money Penalty sanctions for Medicare Conditions of Participation violations and prohibiting the imposition of zero penalties where there have been findings of deficiencies.
- Requiring a qualified physical therapist to functionally reassess patients once every 14 calendar days (instead of on a visit-based schedule).
- Announcing that ICD-10 will be used on HHA claims starting in October 2015.
This article highlights some of the key provisions of the HH PPS Proposed Rule. The full text of the HH PPS Proposed Rule is available here. The CMS Fact Sheet addressing proposed 2015 HHA payment changes is available here.
Reporter, Kristin Roshelli, Houston, +1 713 751 3263, kroshelli@kslaw.com.
District Court Grants in Part, Denies in Part Halifax Hospital's Motion for Summary Judgment on Relator's Non-Intervened FCA Claims – On July 1, 2014, a United States District Court in the Middle District of Florida granted in part, denied in part summary judgment in favor of Halifax Hospital Medical Center in connection with the non-intervened claims brought by Relator Elin Baklid-Kunz (Relator) under the False Claims Act (FCA). As reported in our March 10, 2014, Health Headlines newsletter available here, Halifax Hospital Medical Center and certain other defendants (collectively, "Halifax") previously agreed to pay $85 million to settle allegations that Halifax compensated a group of physicians in a manner not permitted by the Stark Law, including that three neurosurgeons were allegedly paid in excess of fair market value and that six oncologists allegedly received bonuses based on the oncology department's operating volume. The Court's July 1 order relates to a trial, separate from the $85 million settlement, that focuses on allegations that Halifax engaged in a decade-long practice of admitting patients to the hospital for unnecessary short-stays, and then billing federal healthcare programs for such admissions.
In its motion for summary judgment, Halifax raised the following issues:
(1) whether the Relator has provided sufficient evidence as to damages;
(2) whether a failure to abide by certain Medicare "conditions of participation" can render Medicare claims "false" for purposes of the FCA, 31 U.S.C. §§ 3729 et seq.; and
(3) whether some of the Relator's claims are barred by the statute of limitations (i.e., all claims earlier than October 16, 2007).
The Court granted summary judgment on Halifax's first two issues finding that with respect to the issue of damages, "assuming Relator is able to prove that patients were improperly admitted, the proper measure of damages would be the difference between what Halifax billed Medicare for those claims and what Halifax could have billed on an outpatient basis. As Relator has failed to produce evidence from which a reasonable jury could determine this amount, Halifax is entitled to summary judgment insofar as Relator is attempting to recover damages." With respect to the issue whether Medicare conditions of participation can invoke FCA liability, the Court concluded that "Relator will not be permitted to argue that a claim is false solely on the basis of a lack of an admission order, or to present evidence in support of such an argument" because the existence of such admission orders are conditions of participation, not conditions of payment.
The Court did not grant summary judgment based on the statute of limitations because Halifax did not raise the affirmative defense until its proposed jury instructions less than a month before trial as opposed to asserting the defense in its pleadings. The Court also reasoned that although Relator may not have identified in her pleadings any specific claims occurring prior to 2007, Relator generally asserted that the alleged conduct had been going on "since at least 2000." The Court also noted that although Halifax's motion is titled as one for summary judgment, the latter two issues are the subject of motions in limine and are construed as such.
The Court's order is available here. For prior coverage of the Halifax case in Health Headlines, please click here, here and here.
Reporters, Adam Robison, Houston, +1 713 276 7306, arobison@kslaw.com and Juliet M. McBride, Houston, +1 713 276 7448, jmcbride@kslaw.com.
District Court Applies FCA's First-to-File Rule to Determine Relator's Entitlement to Settlement Proceeds – On June 23, 2014, a U.S. District Court in Pennsylvania held that the first relator to file a qui tam complaint under the FCA is the only relator eligible to recover a portion of the settlement, notwithstanding the existence of a settlement agreement including multiple relators. U.S. ex rel. Ryan v. Endo Pharm., Inc., Civ. No. 05-3450 (E.D. Pa.).
Three separate relators filed qui tam complaints against Endo Pharmaceuticals, Inc. (Endo) for allegedly promoting off-label uses of the drug, Lidoderm. Peggy Ryan was the first relator to file a complaint in 2005, amending her complaint in 2009. Subsequently, in 2010 and 2011, two other relators filed complaints. On February 21, 2014, the government elected to intervene on behalf of all three relators, who subsequently all entered into a voluntary settlement agreement with the defendant, Endo. The settlement agreement specifically reserved the issue of the relators' entitlement to share in the proceeds of the FCA settlement.
After holding that Ryan's amended complaint, filed in 2009, was pled with sufficient particularity to state a claim under the FCA, the District Court applied the FCA's first-to-file rule to analyze whether the other two relators were entitled to a portion of the settlement proceeds. The FCA's "first-to-file" rule provides that once someone files a claim alleging an FCA violation, "no person other than the Government may intervene or bring a related action based on the facts underlying the pending action." 31 U.S.C. § 3730(b)(5). The court here held that the first-to-file rule blocked the other two relators' claims because the second and third relators failed to provide any "unique essential facts" relating to the alleged fraudulent acts and/or to raise any new claims that were distinct from Ryan's claims. Thus, the court held that Ryan was the only relator entitled to share in the settlement proceeds.
A copy of the court's opinion is available here.
Reporters, Rebecca Gauthier, Summer Associate, Washington, D.C., + 1 202 626 9238, rgauthier@kslaw.com and Susan Banks, Washington, D.C., + 1 202 626 2953, sbanks@kslaw.com.
Also in the News
New ACO Rules Sent to OMB for Review – On June 26, 2014, a proposed Accountable Care Organization (ACO) rule that would make changes to the Medicare Shared Savings Program in advance of the second round of ACO contracts arrived at the Office of Management and Budget (OMB) for review. The proposed changes would apply to existing ACOs and approved ACO applicants starting January 1, 2016. The OMB posting is available here.
Supreme Court Grants Certiorari in FCA Wartime Statute of Limitations Case – On July 2, 2014, the Supreme Court granted certiorari in United States ex rel. Carter v. Halliburton, a False Claims Act case raising questions about tolling the statute of limitations in wartime. The Supreme Court will review the Fourth Circuit's ruling that the Wartime Suspension of Limitations Act applies to whistleblower suits, even if unrelated to any war contract, and even when the government declines to intervene. The Fourth Circuit's ruling is available here.
This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.