MA Plans Could Not Drop Physicians Without Cause Under Proposed Legislation

Rep. Rosa DeLauro (D-Conn.) and Senator Richard Blumenthal (D-Conn.) discussed the importance of legislation that they introduced that would prohibit Medicare Advantage plans from dropping physicians, providers, and other suppliers from the their networks with little or no notice to Medicare beneficiaries during a conference call sponsored by Medicare advocacy groups. The Medicare Advantage Participants Bill of Rights Act puts in place numerous requirements an MA plan would need to meet before it could remove a physician, provider or other supplier from its network.


Under the legislation a physician, provider, or other supplier could only be dropped from the MA’s network for cause. The MA plan has cause to remove a provider of service if the HHS Secretary determines that the physician, provider or other type of supplier is (1) medically negligent; (2) in violation of any contractual requirement with the MA plan; or (3) is otherwise unfit to furnish items or services. In addition to meeting the definition of cause, an MA plan would have to have the HHS Secretary determine that cause exists before the physician, provider or other supplier could be dropped from its network. The legislation requires the Secretary to establish an appeal process for providers who are removed from an MA’s network.


The legislation also requires that notice be given to beneficiaries enrolled in the MA plan 60 days prior to the date on which the MA plan will no longer cover services from a physician, provider, or other supplier. The notice is to include (1) the last date of coverage for services from the physician, provider or other supplier; (2) the name and telephone number of other physicians, providers or other suppliers in the MA’s network who offer the same services and supplies as the physician, provider or supplier who is no longer in the MA’s network; and (3) a customer service telephone number. In addition, the legislation would require MA plans to establish their networks 60 days before the beginning of the annual open enrollment period and to include that information in their annual bid and on their website.


“This landmark legislative proposal was inspired by the thousands of patients who need a bill of rights to protect them against bait and switch abuses like United Health Care used last year when they dropped hundreds of doctors from their Medicare Advantage networks in Connecticut,” said Senator Blumenthal during a conference call on the legislation sponsored by The Medicare Rights Center and The Center for Medicare Advocacy. “When UnitedHealth dropped an unprecedented number of providers right at the beginning of last year’s Medicare open enrollment period, the stories from seniors in my district were staggering,” said Representative DeLauro. “People were not only worried about their physical health, but had to deal with the mental strain and stress of not knowing whether they were going to have their doctors,” she said.


The Medicare Rights Center reported that 10,000 individuals signed a petition urging Congress to support the bill and enact legal protections to maintain doctor-patient relationships. The legislation was introduced in both the House of Representatives and the Senate on June 26, 2014. It was referred to the Ways and Means and the Energy Committees in the House and to the Finance Committee in the Senate. The legislation has not yet received a hearing in any of the committees.

States’ Projections for Medicaid Expansion Were Accurate

Medicaid spending and enrollment has increased in all states during fiscal years (FYs) 2014 and 2015 due to the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), according to a report from the Kaiser Family Foundation (KFF). Overall spending on Medicaid has increased 10.2 percent during FY 2014 with spending from state source increasing by 6.4 percent. These increases were in line with projections made by state Medicaid administrators. KFF projects that overall spending on Medicaid in FY 2015 will grow 14.3 percent. The higher rate of growth is due to the fact that FY 2105 will be the first full year of Medicaid expenditures since expansion occurred.

As would be expected, the majority of these increases occurred in the states that expanded Medicaid, but enrollment and spending also increased in states that did not choose to expand Medicaid eligibility to all adults with incomes below 133 percent of poverty. These findings are based on KFF’s 14th annual survey of Medicaid directors in all 50 states and the District of Columbia and conducted in conjunction with Health Management Associates. The findings of this study reflect earlier findings (see Hospital financials, access to care, state budgets improve under Medicaid expansion, September 17, 2014).

Medicaid Expansion

The ACA required states to expand eligibility to all individuals with incomes below 133 percent of poverty or lose all federal Medicaid funding. The Supreme Court in National Federation of Business v Sebelius found that this expansion radically changed the nature of Medicaid from a voluntary program providing states with funding to care for the poor and disabled to a program of limited universal coverage—and that those changes were unconstitutional. Following the Supreme Court’s decision states could decide to expand Medicaid or not. During 2014, 25 states and the District of Columbia choose to expand Medicaid and received 100 percent federal funding for the individuals enrolled under the expanded criterion. Those states will receive 100 percent funding for 2014, 2015 and 2016. In 2017 the federal funding will decrease to 95 percent. Funding will continue to decrease to 94 percent in 2018, to 93 percent in 2019, and to 90 percent in 2020 and beyond. During 2015, an additional two states expanded Medicaid eligibility and an additional two states are seeking CMS approval of a waiver to expand Medicaid coverage in their states.

Overall Spending

The average growth in spending on Medicaid was 10.2 percent in FY 2014. In the states that expanded Medicaid the increase in spending averaged 13.1 percent, and in states that did not expand Medicaid the average increase in growth was 5.6 percent. State legislatures did a good job of appropriating sufficient funds to cover this growth, KFF reported. State legislatures appropriated an additional 13.1 percent for Medicaid spending in states that expanded Medicaid, and state legislatures that did not expand Medicaid appropriated an additional 6.8 percent for Medicaid expenditures, which was more than the growth amount of 5.6 percent.

Enrollment Growth

Across the country Medicaid enrollment increased 8.3 percent in FY 2014 and is projected to increase 12.2 percent during FY 2015, KFF reported. Enrollment in states that expanded Medicaid grew by 12.2 percent, and in states that did not expand enrollment Medicaid enrollment increased 2.8 percent during FY 2014. In FY 2015 enrollment in states that have expanded Medicaid is projected to increase 18 percent and 5.2 percent in states that have not expanded Medicaid, according to KFF.

The increase in enrollment in states that did not expand Medicaid eligibility is attributed to individuals who were eligible for Medicaid prior to the ACA but who never applied. The reasoning is that due to increased media attention and outreach efforts these individuals now learned that they might be eligible for Medicaid, even though they were eligible all along. Medicaid directors have estimated that 20 percent of new enrollees were eligible prior to the ACA expansion of Medicaid eligibility, reported KFF.

KFF expects these trends to continue as additional states decide to expand Medicaid eligibility. KFF notes that Congress has increased the amount of federal funding to states for Medicaid during recessions and that this may occur again. Finally, the economy can also impact Medicaid funding, as legislatures have to make decisions based upon receipt of tax revenues. All of these factors could change the rates of change in Medicaid enrollment and spending.

SNFs to Report More Data to Nursing Home Compare

A number of enhancements and additional reporting requirements to the Five-Star Quality Rating System for skilled nursing facilities (SNFs) have been announced by CMS. The enhancements have to do with better collection of data regarding: (1) SNF staffing; (2) the use of antipsychotic medications; (3) state maintenance of quality reporting websites; and (4) a new scoring methodology for determining the number of stars a SNF receives on the Five-Star Quality Rating System. The majority of the enhancements are in response to requirements in the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) or the recently enacted Improving Medicare Post-Acute Care Transformation Act (IMPACT) of 2014, which was signed into law on October 6, 2014 (see New law to make an ‘IMPACT’ on quality of post-acute care, October 6, 2014). These changes were announced in conjunction with the release of a Proposed rule making changes to the conditions of participation for home health agencies (HHAs).

CMS launched the Nursing Home Compare Website in 2002 and the Five-Star Quality Rating System was added in 2008. These tools were designed to provide information to individuals and family members about the quality of care provided at SNFs. In 2011, section 6103 of the ACA required additional information to be added to the Nursing Home Compare Website and the Five-Star Quality Rating System.

Staffing Measurements

The ACA required CMS to collect more data on staffing at SNFs. To meet this requirement, CMS is announcing that it will implement a quarterly electronic reporting system that is connected to payroll systems to verify staffing information. This new system, which was funded by IMPACT, will increase accuracy and timeliness of staffing data, said CMS. New quality measures based on staff turnover, retention, types of staffing and levels of different types of staffing will be able to be developed from this data. In addition, beginning in 2015, focused surveys will be administered to randomly selected SNFs to verify the staffing information and reported quality measures that are contained in the Five-Star Quality Rating System.

Antipsychotic Quality Measure

Beginning in January 2015, SNFs will have to report on the extent to which antipsychotic medications are being administered to residents. This is an enhancement to the posting of the use of antipsychotic medications in two instances as required in a July of 2012 enhancement. In addition, CMS plans to add quality measures that are derived from claims data that document rehospitalization and community discharge rates.

Revised Scoring Method

The methodology used to calculate each SNF’s quality measure rating, which is used to calculate the Five-Star Quality Rating on the Nursing Home Compare Website, will be revised during 2015. CMS is also strengthening an ACA requirement that requires states to maintain a user-friendly website for SNF quality data and survey results. In addition CMS plans on developing ways to help states complete inspections of nursing homes in a more timely and accurate manner so more of that data is used in the Five-Star Quality Rating System.

“Nursing homes are working to improve their quality, and we are improving how we measure that quality,” said Patrick Conway, M.D., deputy administrator for innovation and quality, and CMS’ chief medical officer. “We believe the improvements we are making to the Five Star system will add confidence that the reported improvements are genuine, are sustained, and are benefiting residents,” said Conway.

HHA Providers in High Risk Areas Feel the HEAT

Recently, 14 individuals were arrested or indicted for violations of the Anti-Kickback Statute and for health care fraud and abuse associated with home health agencies (HHAs) in the Detroit and Miami metropolitan areas.  These two areas have been identified by CMS as having a high potential for fraud and abuse amongst HHA providers.  All of the indictments or arrests were made in conjunction with Medicare Strike Forces operating in those cities under the Health Care Fraud Prevention and Enforcement Action Team known as HEAT.

Detroit.  A physician and three others were indicted of conspiring to defraud health care programs of $7 million, according to the Department of Justice.  Dr. Kutub Mesiwala was accused in the indictment of  receiving kick-backs for referring patients to Advance Home Health and for falsely certifying their need for home health care.  The other three allegedly paid kick-backs to Medicare beneficiaries for their signatures on blank physical therapy records which were later filled in with false medical records and used by Advance Home Health and Perfect Home Health.

A co-owner of Empirical Home Health Care was indicted for paying kick-backs to individuals, including physicians, who were recruited to be patients for the HHA.   The indictment charges that these referrals resulted in $2.6 million in Medicare payments, according to the Department of Justice.  Two other people were indicted for violations of the Anti-Kickback Statute for recruiting Medicare beneficiaries for Prestige Home Health and Royal Home Health.

Miami.  The owner of Acclaim Home Health was arrested for conspiracy to commit health care fraud. Orelvis Olivera was accused of paying kick-backs to patient recruiters for Acclaim Home Health.  In addition Mr. Olivera allegedly solicited and received kick-backs from other Miami based home health agencies for referring Medicare beneficiaries to those agencies.  Acclaim billed Medicare for $8 million in association with beneficiaries who were recruited.

Six individual were indicted for soliciting and receiving kick-backs for recruiting patients for Professional Medical Home Health in South Florida.  In addition medical records were falsified to support fraudulent billing for services that were either medically unnecessary or that were not provided. These activities allegedly resulted in $6.2 million in Medicare claims, according to the Department of Justice.

HEAT.  All of these arrest or indictments were the result of Medicare Strike Forces operating under HEAT.  Since their inception Medicare Strike Forces have been responsible for the indictment of 2,000 individuals who have collectively billed Medicare for more than $6 billion.  Medicare Strike Forces are comprised of HHS, Department of Justice, and local investigators who work together to identify and prosecute fraud against Medicare.  Medicare Strike Forces are operating in Brooklyn, Los Angeles, Chicago, Miami and Dade County, Dallas, Detroit, Tampa, Houston, and Baton Rouge.

Moratoria.  All of the indictments and arrests occurred in areas where CMS has established a moratorium on the enrollment of new HHAs.  The Patient Protection and Affordable Care Act (ACA)(P.L. 111-148) gave CMS the ability to place a temporary  moratoria on the enrollment of new providers and suppliers in areas where there is a high risk of fraud, waste or abuse.  A moratorium on the enrollment of new HHAs was first established for Miami and Dade County Florida on July 31, 2013 and for Detroit and Wayne County Michigan on February 4, 2014.    These moratoria have been extended through December 31, 2014.

CMS choose to place a moratorium on new HHA enrollments in these areas based on review of law enforcement data and its own enrollment and billing data.  The areas selected for the moratorium were first identified by a high rate of fraudulent activity.  Then the number of providers per-capita and areas with higher than average per beneficiary expenditures were selected.  The results of the activities of the Medicare Strike Force teams in Detroit and Miami seem to support those findings.