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February 2016

Senators Seek Action on Drug Abuse

A recent Senate committee hearing supported the need for legislation to address an epidemic of addiction to heroin and prescription pain-killers. A group of senators highlighted the Comprehensive Addiction and Recovery Act (CARA) which seeks to mobilize a federal response to the epidemic. The hearing was joined by calls for the final CDC guidance on prescribing opioids for chronic pain. CARA would expand educational and prevention efforts, increase access to drugs that can reverse the effects of overdoses and launch evidence-based treatment and intervention programs. The measure also would give states incentives to strengthen prescription drug-monitoring programs, which can help track at-risk individuals and track prescription drug diversion.

CMS Releases Hardship Application

CMS posted new, streamlined hardship applications on the Payment Adjustments and Hardship Information webpage, reducing the amount of information that eligible professionals, eligible hospitals, and Critical Access Hospitals (CAHs) must submit to apply for an exception from the 2017 payment adjustment. Application timeline:

  • Eligible Professionals: March 15, 2016
  • Eligible Hospitals and CAHs: April 1, 2016

Groups of providers may apply for a hardship exception on a single application. Under the group application, multiple providers and provider types may apply together using a single submission. The hardship exception categories are the same as those applicable for the individual provider application.

“Vertical consolidation”

A report by the Government Accountability Office (GAO) found that “vertical consolidation”—an arrangement in which a hospital acquires a physician practice and/or has physicians on salary—is linked with more evaluation and management (E/M) visits occurring in a hospital setting. The trend leads to increased costs for Medicare, which pays providers at a higher rate when the same service is performed in a hospital outpatient department (HOPD) compared to a physician’s office. Between 2007 and 2013, the number of vertically consolidated hospitals grew from about 1,400 to 1,700, and the number of vertically consolidated physicians nearly doubled, from 96,000 to 182,000. In 2013, the Medicare payment for a midlevel E/M visit was $51 higher when it took place in a hospital. “Such excess payments are inconsistent with Medicare’s role as an efficient purchaser of health care,” the GAO stated. However, the agency noted, the Centers for Medicare & Medicaid Services “lacks the statutory authority to equalize total payment rates between HOPDs and physician offices and achieve Medicare savings.”

Quality Measures

CMS has released a draft CMS Quality Measure Development Plan (MDP) for comment. The MDP supports the transition to a new Merit-based Incentive Payment System (MIPS) and alternative payment models (APMs) for providers. The MDP arises from the passage earlier this year of the Medicare Access and CHIP Reauthorization Act of 2015, which repealed the Medicare sustainable growth rate formula, replacing it with MIPS and APMs, and phasing out the Physician Quality Reporting System, the Value-based Payment Modifier, and Meaningful Use. According to CMS, the MDP will address gaps in the quality measures identified in those programs, meet the statute’s requirements, and serve as a template for developing clinical quality measures to support MIPS and APMs. As stated in the MDP, the agency will apply a positive, negative, or neutral payment adjustment to each MIPS-eligible provider based on a composite performance score to include quality, resource use, clinical practice improvement activities, and meaningful use of EHR technology beginning in 2019. CMS is soliciting stakeholder comments on the draft plan through March 1, 2016; the final MDP will be posted to the CMS website by May 1, 2016 and updated annually or as otherwise appropriate.

Insurance Mega-mergers will get Tough Review from States

State regulators could significantly alter – or perhaps even derail – blockbuster insurance mergers that would reduce the number of major, national health plans from five down to three. Most attention has focused on whether the Justice Department might block Aetna’s $37 billion acquisition of Humana and Anthem’s $54 million takeover of Cigna on antitrust grounds. But antitrust experts point out that health plans are typically regulated by the states, which have a broader mandate to scrutinize issues raised by the deals. States are looking beyond just antitrust concerns. Their exact scope of authority depends on state law, but local regulators are more likely to focus on consumer protection issues such as limiting premium increases, bolstering benefits or even requiring charitable contributions. About 15 state attorney generals are working with the Justice Department to heighten scrutiny of the blockbusters deals. State attorney generals played a similar role in Comcast’s proposed acquisition of Time Warner, which was ultimately abandoned last year after federal regulators came out against the deal.

Congressional Republicans look to update Stark Law

Republicans on the Senate Finance and the Ways and Means committees are considering updating federal anti-kickback statutes including the Stark law to make them work with the new alternative payment models. The two committees are seeking input from providers groups on Stark, which prevents doctors from referring patients to interests in which they have a financial relationship. They are looking at two broad issues: First, the difference between technical violations and more serious infractions, and second, the changes needed to harmonize the law with new payment schemes under MACRA. CMS, for its part, has been working to scale back the Stark law as it affects delivery system reform. The administration loosened some restrictions in a November regulation focused on Stark, and it has offered waivers of the anti-kickback statutes to participants in more aggressive ACOs and in its new bundled payments demonstration for hip and knee surgeries.