News & Insights


October 7, 2019

Health Headlines – October 7, 2019

CMS Issues Final Rule Imposing Discharge Planning Requirements - On Monday, September 30, 2019, CMS published a final rule (CMS-3317-F) that revises discharge planning requirements for Medicare and Medicaid facilities involved in transitions between acute and post-acute settings (the Final Rule).  According to CMS, the goal of the Final Rule is to “empower[ ] patients to be active participants in the discharge process” by providing patients and their families access to information to allow for more informed decision-making on patients’ transition to post-acute care.  The Final Rule is also intended to “complement efforts around interoperability that focus on the seamless exchange of patient information between health care settings” and ensure this information follows the patient after discharge.  Fundamentally, the Final Rule will require acute care hospitals to provide patients at risk of readmission with a discharge summary and help assist patients in accessing the post-acute care that fits the patient’s needs and goals.  In assisting patients with selecting a post-acute facility, hospitals will be required to provide patients and their family caregivers quality measures and data about potential post-acute facilities.  These requirements would also apply to any other level of care facility transitioning a patient to a different post-acute care setting.

CMS initially proposed revising discharge planning requirements in November 2015, while also proposing to implement discharge planning requirements called for under the Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 that required hospitals and post-acute care providers to take into account quality and resource use measures while assisting patients during discharge planning.  MedPAC also issued a recommendation in June 2018 for more clearly defined discharge planning requirements in order to encourage Medicare beneficiaries to use higher quality post-acute providers, noting that a review of referral patterns revealed that beneficiaries were not being steered towards the highest quality providers. 

The Final Rule clarifies provider responsibility to disclose a patient’s right under HIPAA to access their medical records and to ensure that those records are current.  The Final Rule also revises current regulations to require hospitals to identify at an early stage of hospitalization those patients likely to suffer adverse health consequences upon discharge in the absence of adequate discharge planning, and that may be at risk for relapse or readmission.  For those patients, or upon the request of the patient, patient representative, or physician, discharge planning evaluation must be conducted.  Hospitals must provide a discharge summary and work with the patient to develop an effective discharge planning process that focuses on patient goals and preferences and the reduction of likelihood of hospital readmissions.  Discharge plans must be tailored to the unique goals, preferences, and needs of the patient and discharge planning must be reflected in the patient’s medical record. 

The Final Rule also requires that hospitals assist patients and their family caregivers in selecting a post-acute care provider by using and sharing quality measures and date on resource use.  Hospitals are also required to document this process, including what information was shared with the patient, in the patient’s medical record.  These same protocols are also imposed on home health agencies and critical access hospitals. 

The regulations adopted in this Final Rule are effective on November 29, 2019.  The Final Rule (CMS-3317-F) can be viewed here

Reporter, Jonathan H. Shin, Los Angeles, +213 443 4334,

MedPAC Issues Proposal to Reduce Hospice Cap by 20 Percent – On October 4, 2019, the Medicare Payment Advisory Commission (MedPAC) presented a study of the effects of wage adjusting and reducing the hospice payment cap by 20 percent.  Often, according to MedPAC, aggregate payments to hospices “substantially” exceed the cost of providing care, particularly for long hospice stays.  The cap serves to temper this imbalance and reducing the cap could save the Medicare program approximately $573 million per year under MedPAC’s analysis.  MedPAC has not formally recommended this change to Congress but is considering doing so with further study.  The proposal is available here.

Terminally ill patients may receive hospice care under Medicare Part A for two 90-day periods and unlimited number of subsequent 60-day periods with physician certifications of terminal illness.  Medicare pays hospices a daily rate for each patient-enrolled day, regardless of actual services furnished on a given day.  This payment is adjusted based on market wages.  Currently, hospices receive aggregate Medicare payment for the services they provide, limited by an annual cap, which is not adjusted for wages.  See 42 C.F.R. § 418.309.  If a hospice provider’s total payments are greater than the product of the number of patients and the cap amount, the hospice provider is to repay the excess to Medicare.  Id.  This cap amount is increased annually for inflation and for FY 2020, CMS has set the cap at $29,965.  84 Fed. Reg. 38484, 38505 (Aug. 6, 2019).

Under MedPAC’s analysis, 12.7 percent of all hospices exceeded the cap in FY 2016, and those above the cap still saw profit margins of 12.6 percent even after returning cap overpayments.  The average hospice length of stay of decedents in 2016 was 87.8 days.  The above-cap hospices have patients with substantially longer lengths of stay and higher live discharge rates.  They are also disproportionately for-profit, freestanding, urban, and small.  Furthermore, hospices in high wage index areas are more likely to exceed the cap than those in low wage index areas.

According to MedPAC, a 20 percent reduction in the cap would mean that 26 percent of hospices would have exceeded the cap and owed overpayments to the Medicare program, as compared to 12.7 percent under the current cap calculation.  This data analysis also showed that a cap reduction would have little effect on nonprofit and hospital-based hospices; the impact would be highest for hospices with patients with disproportionately long stays and high margins.  Ultimately, MedPAC claims that wage adjusting and reducing the cap will improve “cap equity,” improve payment accuracy, reduce overpayments to providers with disproportionately long stays, and “lessen attractiveness of business model focusing on long stays.”

Reporter, Elizabeth Swayne, Washington, D.C., +1 202 383 8932,

CMS Seeks Comment on 340B Drug Discount Program Proposed Data Collection – On September 30, 2019, CMS announced its intent to survey hospitals to collect information regarding hospitals’ acquisition costs for specified covered outpatient drugs under the 340B Drug Discount Program. CMS is seeking public comment on its proposal. Under the proposal, any hospital enrolled in the 340B program as a covered entity in the last quarter of 2018 and/or the first quarter of 2019 would be required to complete the survey. Each hospital must list each provider-based department of the hospital that is enrolled in the 340B program and paid under the hospital Outpatient Prospective Payment System (OPPS).  Hospitals will also be asked to provide the HCPCS code for each specified covered outpatient drug, drug name and a short descriptor, dosage unit for each drug, and the average 340B price for the fourth quarter of 2018 and for the first quarter of 2019.

The survey is a result of the 2018 court decision that found HHS exceeded its authority in reducing payment rates under OPPS.  See American Hospital Ass’n v. Azar, 348 F. Supp. 3d 62, 82-83 (D.D.C. 2018), appeal pending, Nos. 19-5048 & 19-5198 (D.C. Cir.).  The payment adjustment for these drugs acquired under the 340B Drug Discount Program was struck down, in part, because the court found that HHS had not collected the data necessary to set payment rates based on acquisition costs. Although CMS has appealed the court’s ruling, it is now proposing to collect acquisition cost data in case the ruling is affirmed. The results of the survey will be used to help determine payment amounts for 340B acquired drugs. See 42 U.S.C. § 1395l(t)(14)(A)(iii)(I).

CMS’s notice is available in its entirety here. Additional details on the survey are available on CMS’s website here. The data collection period is set to begin February 17, 2020, and end March 16, 2020, with completed surveys to be submitted to each hospital’s Medicare Administrative Contractor by no later than March 16, 2020. CMS is accepting public comments until November 29, 2019, which can be submitted here.

Reporter, Yujin Chun, Los Angeles, +1 213 443 4322,

Also in the News

King & Spalding Roundtable:  Surprise Billing Laws – King & Spalding will host a webinar on Wednesday, October 16, 2019, from 1:00 P.M. – 2:00 P.M. ET discussing surprise billing laws and what providers should know. This webinar will address:

  • The prevalence, causes, and concerns of surprise medical bills;
  • States that have passed legislation aimed at addressing surprise medical bills;
  • A comparison of the approaches and applications of the state laws;
  • Limitations on the jurisdiction of state laws and the potential effects of federal legislation; and
  • The current status of federal surprise medical bills legislation, what it might look like, and the odds of its successful passage.

Registration for this event is available here.  There is no charge to attend.

King & Spalding Hosting 12th Annual Pharmaceutical University – King & Spalding’s 12th Annual “Pharma U” is being held on Tuesday, November 12, 2019, from 8:30 A.M. – 5:30 P.M. ET at the Westin Philadelphia in Philadelphia, PA. Lawyers from King & Spalding’s life sciences and healthcare industry group will discuss cutting-edge issues critical to lawyers, executives and managers. This year’s sessions will address regulatory, enforcement, litigation, commercial, corporate, intellectual property, international trade and political issues, among many other topics that will demand your attention in 2020. More information about this event, as well as registration details, can be found here.