News & Insights


November 4, 2019

Health Headlines – November 4, 2019

CMS Issues CY 2020 End-Stage Renal Disease / Durable Medical Equipment Final Rule - On October 31, 2019, CMS issued a final rule (the Final Rule) that updates payment policies and rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) effective for calendar year (CY) 2020 and makes changes to payment for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) items and services.  Notable ESRD PPS policies finalized in the Final Rule include the exclusion of certain drugs from eligibility for the Transitional Drug Add-On Payment Adjustment (TDAPA) and the creation of a new transitional add-on payment adjustment for certain new and innovative renal dialysis equipment or supplies furnished by ESRD facilities.  With respect to DMEPOS payment policies, CMS finalized a methodology for calculating fee schedule amounts for new DMEPOS items, created a standardized set of required elements for all DMEPOS orders, created a “Master List” of items potentially subject to prior authorization and/or face-to-face encounter and written order prior to delivery requirement, and revised certain requirements pertaining to changes of ownership (CHOWs). 

ESRD PPS Provisions

CMS made the following notable changes pertaining to the ESRD PPS:

  • Annual updates.
    • CMS updated the ESRD PPS base rate for CY 2020 to $239.33 – an increase of $4.06 to the current base rate.  The acute kidney injury dialysis payment rate will equal the same amount.
    • CMS also updated the wage indices and outlier amounts using the most recent data. 
  • TDAPA policies. 
    • CMS will exclude from TDAPA drugs approved under 21 U.S.C. § 355(j) and drugs approved under 21 U.S.C. § 355(c) that are classified by FDA as new drug application (NDA) Types 3, 5, 7, or 8; Type 3 in combination with Type 2 or 4; Type 5 in combination with Type 2; or Type 9 when the parent NDA is Type 3, 5, 7 or 8.  These categories represent generic drugs, new dosage forms or new formulations of previously approved active ingredients, drugs that were previously marketed but without an approved NDA, and prescription over-the-counter drugs.
    • TDAPA payment for calcimimetics will continue in CY 2020 but the amount will change to 100 percent of average sales price (ASP).
    • To address insufficient reporting by manufacturers of ASP data, CMS will stop applying TDAPA for a new product if CMS does not receive a full calendar quarter of ASP data within 30 days of the last day of the third calendar quarter after TDAPA payments for the product begin.
  • Transitional add on payment for equipment and supplies.  CMS finalized the establishment of a new Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES).  TPNIES payment will be available for equipment and supplies that (1) have been designated by CMS as a renal dialysis service, (2) were granted marketing authorization by FDA on or after January 1, 2020, (3) are commercially available by January 1 of the year in which the payment adjustment would take effect, (4) have a HCPCS application submitted by September 1 of the payment adjustment year, (5) meet the substantial clinical improvement criteria specified at 42 C.F.R. § 412.87(b)(1), and (6) are not capital-related assets.
  • Erythropoiesis-stimulating agent monitoring policy.  The erythropoiesis-stimulating agent monitoring policy is discontinued. 

DMEPOS Provisions

CMS made the following notable changes pertaining to DMEPOS items:

  • Fee schedule amounts for new DMEPOS items and services. 
    • For a new DMEPOS item that is determined to be comparable to an existing item, the amount of the existing item will be assigned to the new item.  For a new DMEPOS item that is determined to be without a comparable existing item, the fee schedule amount will be based on other sources of commercial pricing data, such as retail prices or information from supplier invoices. 
    • CMS did not finalize the use of technology assessments to establish the fee schedule amount for new items.
    • A one-time adjustment will be applied to gap-filled fee schedule amounts if, within 5 years of establishing the initial fee schedule amount based on supplier or commercial prices, such prices decrease by less than 15 percent.
  • Conditions of payment applied to certain DMEPOS items. 
    • CMS created the following standardized set of required elements for all DMEPOS orders: beneficiary name or Medicare identifier, description of item, quantity to be dispensed, date, treating practitioner name or identifier, and treating practitioner signature.  
    • CMS developed a “Master List” of items potentially subject to prior authorization and/or face-to-face encounter and written order prior to delivery requirement. The list is included in the Final Rule as Table 13.
  • Change of ownership regulations. In the regulations governing the DMEPOS competitive bidding program (CBP), CMS made several changes pertaining to CHOWs.  Specifically, CMS removed the requirement for a supplier to notify CMS of a CHOW 60 days prior to the effective date of such CHOW, removed the distinction for a “new entity,” and changed the timing requirement of submitting a novation agreement to CMS to within 10 days following the effective date of the CHOW.
  • Data measuring sales of diabetic testing strips. In the proposed rule, CMS requested suggestions for sources of data measuring sales of diabetic testing strips to Medicare beneficiaries, to assist CMS in complying with a statutory provision that requires CMS to determine such volume through the use of multiple sources of data.  In the Final Rule, CMS stated that, while some commentators responded to CMS’s request, the comments did not mention any data or readily available sources of data. Accordingly, CMS has not yet devised a final method for determining strip sales volumes. 

The Final Rule is currently available here, and the CMS announcement is available here.

Reporter, Igor Gorlach, Houston, +1 713 276 7326,

CMS Issues Final Rule for CY 2020 Home Health Payments, CY 2021 Home Infusion Therapy Benefit – On October 31, 2019, CMS issued a final rule with comment period (Final Rule), CMS-1711-FC, updating the payment rates for home health agencies (HHAs) for calendar year (CY) 2020.  As explained below, the Final Rule also:

  • Modifies quality reporting measures for HHAs;
  • Updates reporting requirements of performance scores affecting HHAs;
  • Finalizes the CY 2021 home infusion therapy benefit payment system; and
  • Permits therapist assistants to furnish maintenance therapy under the home health benefit.

The Final Rule is effective January 1, 2020, and comments solicited by the Final Rule are due on December 30, 2019.

Updates to the Home Health Prospective Payment System (HH PPS)

The Final Rule changes the unit of home health payment from 60-day episodes of care to 30-day periods of care, and it introduces a 30-day payment amount for CY 2020.

As required under the Bipartisan Budget Act of 2018, the Final Rule implements the Patient-Driven Groupings Model (PDGM), which is an alternate case-mix adjustment methodology featuring a 30-day unit of payment for home health periods of care beginning January 1, 2020.  The CY 2020 30-day payment amount will be $1,864.03.  CMS projects that aggregate payments to HHAs in CY 2020 will increase 1.3 percent.

Update to Home Health Value-Based Purchasing (HHVBP) Model

Consistent with CMS’s goal of providing data for comparisons among HHAs, the Final Rule also includes a finalized requirement for public reporting of Total Performance Scores (TPS) and TPS Percentile Rankings from Performance Year 5 (CY 2020) Annual TPS and Payment Adjustment Reports for the home health agencies in the 9 Model states that qualified for a CY 2020 payment adjustment.  CMS anticipates releasing the data after December 1, 2021 (after its completion of annual reports for HHAs).

Update to Home Health Quality Reporting Program (HH QRP)

The Final Rule also updated the Home Health Quality Reporting Program (HH QRP), in which HHAs are required to submit quality measure and standardized patient assessment data or face a two percent reduction to their market basket increase for the year involved.  The HH QRP currently has 19 quality measures, but the Final Rule updated those measures in the following ways:

  • Removal of a quality measure (the Improvement in Pain Interfering with Activity Measure) consistent with efforts to “mitigate any potential unintended, over-prescription of opioid medications inadvertently driven by this measure.”  However, CMS is not removing, based on stakeholder feedback, Question 10 from HH Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys, which asks, “In the last 2 months of care, did you and a home health provider from this agency talk about pain?”
  • Adoption of two new quality measures regarding the assessment of transfers of health information, dubbed the “Transfer of Health Information to Provider-Post-Acute Care” and “Transfer of Health Information to Patient-Post-Acute Care” measures.

Beginning in CY 2022, HHAs are also required to report standardized patient assessment data related to quality measures and the standardized patient assessment data elements (SPADEs) under the Improving Medicare Post-Acute Care Transformation (IMPACT) Act.  CMS is working to finalize additional SPADEs to fulfill IMPACT Act requirements and improve coordinate of care, among other things.

Update to Home Infusion Therapy Payments

Section 5012 of the 21st Century Cures Act established a new Medicare home infusion therapy benefit and a temporary transitional payment through the end of CY 2020. The Final Rule accomplishes the implementation of a permanent home infusion therapy services payment system required by the Act.

The CY 2020 HH PPS Final Rule features the home infusion therapy payment rates for CY 2021 “to provide sufficient time for providers and suppliers to prepare for the full implementation” of the new home infusion therapy benefit. These payment provisions will apply after the home infusion therapy services temporary transitional payments expire in 2020.  CMS created three payment categories for home infusion therapy drugs that will be paid at amounts under the Physician Fee Schedule (PFS).  However, CMS will pay more for initial home infusion therapy visits to “account for costs to initiate these services.”  According to CMS, the home infusion drugs must be administered intravenously at home through a pump qualifying as durable medical equipment (DME).

The Final Rule also solicits comments on the future of policies governing coverage of eligible home infusion therapy drugs.

Updates for Therapist Assistant Roles

The Final Rule also permits therapist assistants to perform maintenance therapy under the Medicare home health benefit, bringing these roles in line with those permitted in skilled nursing facilities (SNFs), where therapist assistants already are permitted to perform maintenance therapy.  This change, according to CMS, will provide HHAs with greater flexibility in deploying therapists and therapist assistants.

The current version of the Final Rule is available online here, and the CMS Fact Sheet is available here. The Final Rule is scheduled to be published in the Federal Register on November 8, 2019.

Reporter, Lee Nutini, Atlanta, +1 404 572 3533,

Indiana Medicaid Suspends Work Requirements Pending Resolution of Federal Lawsuit - On October 31, 2019, in the face of a federal lawsuit, the Indiana Family and Social Services Administration suspended its enforcement of work requirements under the state’s Medicaid waiver project, the Healthy Indiana Plan (HIP).  In 2018, CMS approved Indiana’s request to impose mandatory work requirements as a condition of coverage.  The approval followed CMS’s announcement of a new waiver policy supporting the inclusion of “work or other community engagement requirements” in demonstration projects authorized under Section 1115 of the Social Security Act.

Indiana began implementing its work requirements on January 1, 2019 as part of its Gateway to Work program. Prior to the suspension, HIP enrollees were required to meet escalating monthly time requirements for qualifying activities.  If an enrollee failed to meet the work requirements for more than four months of a year, the individual’s benefits would be suspended beginning on the first day of the next year.  The suspension would last until the enrollee completed the required hours for one month, qualified for an exemption, or was terminated from the HIP through a redetermination process.  Gateway to Work exempts certain categories of enrollees based on qualifying health, education, and other factors (e.g., pregnancy, medical frailty, 60 years of age and older).

The plaintiffs in the lawsuit are asking the D.C. District Court for declaratory and injunctive relief, arguing HHS violated the Administrative Procedure Act when it approved Indiana’s request to impose the work requirements because, among other reasons, the new waiver policy did not go through proper notice and comment rulemaking and exceeds the scope of the agency’s Section 1115 waiver authority.  Previously, the D.C. District Court issued opinions blocking Arkansas, Kentucky, and New Hampshire from implementing similar work requirements. All three states have appealed the rulings to the U.S. Court of Appeals for the D.C. Circuit. 

The Indiana case is Rose, Jr. v. Azar, Case No. 1:19-cv-02848, and the complaint is available here.

Reporter, Kyle Gotchy, Sacramento, +1 916 321 4809,

Also In The News:

King & Spalding Roundtable – Recalculating: Are the Major Stark, Anti-Kickback and CMP Proposed Rule Changes Taking Us in a New Direction?

PART 1:                                            PART 2:

Thursday, November 7, 2019            Wednesday, November 20, 2019
1:00 P.M. – 2:30 P.M. ET                  1:00 P.M. – 2:30 P.M. ET

CMS and OIG recently proposed the most significant changes to the Stark Law rules, the Anti-Kickback Statute (AKS) safe harbors, and the Beneficiary Inducements CMP regulations that the agencies have offered in recent years.  The proposed rules address value-based arrangements, introduce major changes to other key Stark Law concepts and definitions, address the donation of cybersecurity technology and services, and create flexibility to provide patient incentives in value-based arrangements and with respect to telehealth.  Click here to read King & Spalding’s Client Alert highlighting the key proposals.

We are hosting a two-part webinar series to discuss these proposals in greater detail, described below.  We will cover the opportunities raised by these proposals, as well as how they may impact enterprise risk and future enforcement actions.  Our goal is to stimulate thinking about the submission to CMS and OIG of comments on these proposed rules, which are due on December 31, 2019. 

  • In Part One, we will discuss proposed changes other than those relating to value-based arrangements and patient incentives.  The topics will include the proposed changes to fundamental Stark Law concepts such as taking into account the volume or value of referrals or other business generated, fair market value, commercial reasonableness, and the definition of indirect compensation arrangements.  We also will address proposed changes to the writing requirements, proposed changes to several commonly used compensation exceptions, and proposals related to cybersecurity technology and related services. 
  • In Part Two, we will discuss proposals related to value-based arrangements and patient incentives.  This will include the newly proposed AKS safe harbors and Stark Law exception for value-based arrangements, modifications to existing AKS safe harbors and Stark Law exceptions to address value-based arrangements, newly proposed AKS safe harbors for patient incentives, revisions to the local transportation safe harbor, and a proposed telehealth exception to the Beneficiary Inducements CMP.

You do not have to be a client to attend, and there is no charge.  To register, please click here.  Your registration will allow you to attend Part One and Part Two.

King & Spalding Will Host 12th Annual Pharmaceutical University in Philadelphia

On November 12, 2019, King & Spalding will host more than 300 guests at its annual Pharmaceutical University at the Westin in Philadelphia.  For more than a decade, attendees of Pharma U have raved about the breadth and quality of the programming and have embraced the many opportunities to network with hundreds of attendees from the world’s most sophisticated pharmaceutical and biotechnology companies.

This year’s curriculum will include four concurrent tracks and more than 20 different interactive presentations from which to choose.  Lawyers from across the firm will deliver courses on cutting-edge issues critical to pharmaceutical and biotechnology lawyers, executives, and managers.  This year’s sessions will address cutting-edge issues including regulatory, enforcement, litigation, commercial, corporate, intellectual property, international trade, and political issues.

Click here to register.  Space is limited.  For more information about accommodations, click here.