Archives for October 2016

Vermont’s ACO Model: A unified payment structure focusing on health outcomes

The trial of an alternative payment model designed to incentivize “health care value and quality, with a focus on health outcomes, under the same payment structure for the majority of” Vermont health care providers throughout the state, including Medicare, Medicaid, and commercial health care payers, will begin on January 1, 2017, and end on December 31, 2022. According to CMS, the goal of this payment model, known as the Vermont All-Payer Accountable Care Organization (ACO) Model, is “to deliver meaningful improvements in the health of a state’s population by transforming the relationships between and amongst care delivery and public health systems across Vermont” (see HHS delivers on alternative payment model promises ahead of schedule, Health Law Daily, March 4, 2016). The Vermont All-Payer ACO Model builds on the Maryland All-Payer Model by bringing statewide health care transformation beyond the hospital (All-payer system helps Maryland keep cost growth below federal level, Health Law Daily, July 22, 2016).

The Vermont ACO model will be in effect for six performance years (PY0-PY5), each spanning a full calendar year. CMS will provide start-up funding of $9.5 million in 2017 to support care coordination and collaboration between practices and community-based providers. Vermont will be accountable for statewide health outcomes, financial, and ACO scale targets across health care payers. CMS also approved a five-year extension of Vermont’s section 1115(a) Medicaid demonstration, which enables Medicaid to be a full partner in the Vermont All-Payer ACO Model.

According to CMS, “the Vermont Medicare ACO Initiative is considered a Medicare Advanced Alternative Payment Model for the providers in the two-sided risk Medicare ACO portion of the model within CMS’ Quality Payment Program, and physicians and other clinicians participating in the Vermont Medicare ACO Initiative may potentially qualify for the Advanced Alternative Payment Model bonus payments starting in performance year 2018.”


Vermont’s statewide targets include ACO scale targets, all-payer and Medicare financial target, and health care and quality of care targets.

Although ACOs will continue payer-specific benchmarks and financial settlement calculations, the ACO design will be aligned across payers. Vermont payers and providers will be encouraged to participate in ACO programs with a goal of attaining 70 percent of all residents, including 90 percent of Vermont Medicare beneficiaries, participating in an ACO. Vermont’s ACO Model will help CMS attain itsgoal of “having 50 percent of all Medicare fee-for-service payments made via alternative payment models by 2018” (see New alternative payment models announced by CMS, Health Law Daily, October 26, 2016).

In terms of the financial target, Vermont will limit the annualized per capita health care expenditure growth for all major payers to 3.5 percent and the Medicare per capita health care expenditure growth for Vermont Medicare beneficiaries to at least 0.1-0.2 percentage points below that of projected national Medicare growth.

Vermont identified four priorities for its Health Outcomes and Quality of Care target: substance use disorder, suicides, chronic conditions, and access to care. Each of the priorities will be measured in three categories: (1) population-level health outcomes regardless of whether the population seeks care at the providers in the ACO; (2) health care delivery system measures and targets primarily related to the performance of care delivered by the ACO; and (3) process milestones measurable during the early years of the Model that would support achievement on the population-level and health care delivery system measures and targets.

Medicare ACO Initiative 

The CMS Medicare Fee-for-Service ACO initiative that is offered by CMS to ACOs in Vermont has been tailored for the Vermont All-Payer ACO Model. The Vermont Medicare ACO Initiative is based on CMS’ Next Generation ACO Model and will support ACO design alignment with other Vermont payers’ ACO programs. Participants in the Vermont Medicare ACO Initiative may not participate in the Medicare Shared Savings Program simultaneously.


The section 1115(a) Medicaid demonstration promotes delivery system and payment reform by allowing Vermont Medicaid to enter into ACO arrangements that align in design with that of other health care payers in support of the Vermont All-Payer ACO Model. For more information on Vermont’s section 1115(a) Medicaid demonstration extension see Fact Sheet and CMS Approval Letter.

AHA criticizes CMS for ‘information void’ on short hospital stay claims

In a qui tam action that the American Hospital Association (AHA) characterized as an attempt to retrospectively review the medical judgments that doctors make every day, the association urged the court and the Department of Justice to approach short-stay hospital stays with “sensitivity” to the challenges that providers face in the “information void” left by CMS. While the AHA said in its amicus curiae brief that it took no position on the proper outcome of the case and sought only to provide background, it made clear its position that CMS’s standards for observation admissions are ambiguous.

In 2011 Karin Berntsen, an employee of Prime Healthcare Services, Inc., filed a qui tam action against the hospital system, its founder, and 14 of its hospitals alleging that emergency departments improperly admitted patients who could have been placed in observation, treated as outpatients, or discharged. She alleged that as a result of these unnecessary admissions, the hospitals submitted false claims to the federal health care programs. The federal government intervened in May 2016.

In its brief, the AHA explained that observation is a distinct type of hospital care, not to be confused with inpatient, emergency, clinic, or recovery services, that involves ongoing monitoring, testing, and assessment solely for the purpose of determining the need to admit a patient. There are, however, no clear standards for these admission decisions, said the AHA.

For example, argued the AHA, in the hospital inpatient prospective payment system (IPPS) proposed rule for calendar year 2014, CMS asked doctors to use a 24-hour period and the expectation of a patient’s need for an overnight stay as inpatient admission benchmarks (Proposed rule, 78 FR 27486, 27646, May 10, 2013), then in August 2013 promulgated the two-midnights rule (Final rule, 78 FR 50495, 50944, August 19, 2013). Indeed, the Medicare Payment Advisory Commission (MedPAC) noted that the difference between the inpatient criteria and the criteria for outpatient observation status are often unclear to providers.

In light of these ambiguous standards, which the AHA said CMS has struggled unsuccessfully to refine and clarify, the association asked courts to require the government in False Claims Act litigation to allege with specificity why inpatient claims are improper.

Highlight on Colorado: 2016 report on effects of marijuana legalization

On November 8, 2016, nine states will have legalization of marijuana for either medical or recreational use on the ballot. Five of those states will consider the recreational use of marijuana, including California, Massachusetts, Maine, Arizona, and Nevada. Before these states “go to pot,” perhaps they should consider the results of a 2016 study by the Colorado Department of Public Safety.

The study was mandated by the Colorado General Assembly. It required the Division of Criminal Justice in the Colorado Department of Public Safety to conduct a study of the impacts of Colorado’s 2013 legalization, particularly as they relate to law enforcement activities.

Public Safety

The study found that the total number of marijuana arrests decreased by 46 percent between 2012 and 2014, from 12,894 to 7,004. As a share of all arrests in Colorado, marijuana was responsible for 6 percent of all arrests in 2012 and 3 percent in 2014. The number of marijuana arrests decreased by 51 percent for Whites, 33 percent for Hispanics, and 25 percent for African-Americans.

In terms of court filings, the study found that the total number of marijuana-related filings declined 81 percent between 2012 and 2015, from 10,340 to 1,954. The filings fell 69 percent for juveniles 10 to 17 years old, 78 percent for young adults 18 to 20 years old, and 86 percent for adults 21 or older. In terms of organized crime, between 2012 and 2015, there were 88 filings that were related to some marijuana charge. The most common marijuana industry-related crime in Denver was burglary, accounting for 63 percent of marijuana crime related to the industry in 2015.

Traffic safety data was limited, but the study noted that the number of summons issued by the Colorado State Patrol for Driving Under the Influence in which marijuana or marijuana-in-combination with other drugs was involved decreased 1 percent between 2014 and 2015 (674 to 665).

In terms of assessing diversion of marijuana to other states, from January 1, 2014, to August 30, 2015, the study found that there were 261 drug-related interdiction submission in which Colorado was the initiating state. Of those 261 submissions, 169 (65 percent) were for marijuana/hashish.

Public Health

According to the National Survey on Drug Use and Health, administered by the Substance Abuse and Mental Health Services Administration, the current prevalence rates for marijuana usage in the past 30 days have increased significantly for young adults (18 to 25 years old), from 21 percent in 2006 to 31 percent in 2014. Marijuana use by adults (26 years or older) also increased significantly, from 5 percent in 2006 to 12 percent in 2014. In comparison, the study cited a 2014 telephone survey in Colorado that found 14 percent of adults reported marijuana use in the past 30 days and 33 percent of current users reported using daily.

According to the study, hospitalizations with possible marijuana exposures, diagnoses, or billing codes per 100,000 hospitalizations increased from 803 per 100,000 before commercialization (2001-2009) to 2,413 per 100,000 after commercialization to 2,413 per 100,00 after commercialization (2014- June 2015).  The number of calls to poison control mentioning marijuana exposure increased from 44 calls in 2006 to 227 calls in 2015.

Youth Impact

The study noted that in 2013, a Healthy Kids Colorado Survey (HKCS) found that 80 percent of high school students did not use marijuana in the past 30 days. The HKCS showed, however, that marijuana use increased by grade level and that Colorado youth use marijuana at a higher rate then the national average. The perception of health risk of using marijuana is also declining among Colorado youth, according to the HKCS.

The number of juvenile marijuana arrests increased 5 percent, from 3,234 in 2012 to 3,400 in 2014, according to the study. The number of White juvenile arrests decreased from 2,198 in 2012 to 2,016 in 2014 (-8 percent). The number of Hispanic juvenile arrests increased from 778 in 2012 to 1,006 in 2014 (+29 percent). The number of African-Amercian juvenile arrests increased from 205 in 2012 to 324 in 2014 (+58 percent).

The study noted that data on drug tests from the Division of Probation Services showed that the percent of the 10- to 14-year-old group testing positive for tetrahydrocannabinol (THC — the chemical responsible for most of marijuana’s psychological effects) one or two times increased from 19 percent in 2012 to 23 percent in 2014, while the percentage testing positive three or more times went from 18 to 25 percent.

Colorado Department of Education data showed that the drug suspension rates increased from 391 (per 100,00 students) in the 2008-09 school year to 506 in 2009-10. In addition, the drug expulsion rate was 65 in 2008-09, increasing to 90 in 2009-10, and decreasing to 50 in 2014-15.

Revenue Data

The study also noted that in December 2015 there were 2,538 licensed marijuana businesses in Colorado, with 70 percent located in Denver, El Paso, Pueblo, and Boulder. The total tax revenue, licenses, and fees from these businesses increased from $76,152,468 in 2014 to $135,100,465 in 2015 (+77 percent). The excise tax revenue dedicated to school capital construction assistance totaled $35,060,590 in 2015.


The study found that because data was only available through 2014, it was too soon to draw any definite conclusions about the potential effects of marijuana legalization or commercialization on public safety, public health, or youth outcomes. In addition, the study noted that the lack of pre-commercialization data, the decreasing social stigma, and challenges to law enforcement combine to make it difficult to translate the early findings into definitive statements of outcomes.



Kusserow on Compliance: OIG testifies regarding Detroit investigation results

The HHS OIG provided testimony before the House Ways and Means Subcommittee on Oversight, describing their work in Detroit to protect Medicare and Medicaid beneficiaries and to fight health care fraud from the field agent’s perspective. The OIG typically conducts investigations in partnership with other Federal and State agencies, as well as the private sector. Often investigations are part of the Detroit-based Medicare Fraud Strike Force, which combines the resources of Federal, State and local law enforcement entities to prevent and combat health care fraud across the country.

The OIG receives complaints or investigative leads from a variety of sources, including the OIG hotline, law enforcement partners, beneficiaries, providers, and informants. Traditional means of identifying fraud include conducting interviews of cooperating witnesses and surveillance. The schemes investigated range from billing for services not actually performed to organized criminal enterprises. The perpetrators of these frauds can range from highly respected physicians to individuals with no prior experience in the health care industry. The OIG highlighted some major areas of where they have been focusing, including:

  • Home and community-based services. Home and community-based services, including personal care services (PCS), which are particularly vulnerable to fraud, with investigations resulting in more than 350 criminal and civil actions and $975 million in investigative receivables for fiscal years 2011 – 2015.
  • Unnecessary prescriptions. Physicians write medically unnecessary controlled substance prescriptions in exchange for cash or submission by a patient to medically unnecessary services.
  • Prescription drug fraud. Enforcement action against and prevention of prescription drug fraud is a major priority to address a rapidly growing national health care problem, and an opioid epidemic with 678 pending complaints and cases involving Medicare Part D, which represents a 152-percent increase in the last 5 years.

The OIG employs data analytics and real-time field intelligence to detect and investigate program fraud and to target our resources for maximum impact. They also reported being a leader in the use of data analytics, employing a dedicated data analytics unit. The OIG also has direct access to Medicare claims data and use innovative methods to analyze billions of data points to identify trends that may indicate fraud, geographical hot spots, emerging schemes, and individual providers of concern. Testimony summarized the OIG national investigative results during the period of 2013 through 2015, as follows:

  • $11 billion in receivables, or money ordered or agreed in settlements
  • 2,856 criminal actions
  • 1,447 civil actions, and
  • 11,343 program exclusions.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.