Highlight on Vermont: New all-payer model grows out of state Medicaid budget crisis

For months, Vermont has been struggling with how to pay for its Medicaid program as reported costs have far outstretched allotted budgets. Instead of reducing benefits for all of the newly insured enrollees in Vermont’s health care programs, Governor Peter Shumlin announced a new payment system entirely, one that he claims will transform its health care system from one that rewards fee-for-service, quantity-driven care to one that rewards quality-based care that focuses on keeping Vermonters healthy.

All payer model. This new all-payer model is described by Shumlin as an agreement between the state and CMS that enables the three main payers of health care in Vermont–Medicaid, Medicare, and commercial insurance—to pay for health care differently than the traditional fee-for-service reimbursement. In an all-payer model, Vermonters will continue to have the same choice of providers as they have today under Medicare, Medicaid, and commercial insurance. Benefits will not be reduced and by changing the payment structure, Medicare beneficiaries may have access to, and coverage for, new services not currently covered by Medicare.

In Vermont’s proposal, the all-payer model will require commercial insurers and Medicaid to pay the same way Medicare will be paying for health care under its Next Generation program. All involved payers will approach health care payment to accountable care organizations in a common way and all payers will provide doctors and other health care professionals the flexibility they need to lead health care delivery change. Maintaining the same set of rules, standards, and methods of payment across payers will drive efficiencies in the system. The all-payer model builds off current federal and state health care reform efforts that have value-based payment components.

Outlined to the public on January 25, 2016, Shumlin and the Green Mountain Care Board released an outline or term sheet detailing the new all-payer system. The state is focusing on three main health goals: increasing access to primary care, reducing the prevalence of chronic diseases, and addressing the substance abuse crisis. The term sheet lays out plans to curb expenses by setting a 3.5 percent spending target and 4.3 percent spending cap, with a commitment that “Medicare will grow more slowly in Vermont than nationally.” These financial targets, the term sheet notes, are based on health care services in Vermont’s Medicare, commercial, and Medicaid shared savings programs today, mostly hospital and physician services.

“From Day 1, reforming the way doctors and other medical providers are paid has been a priority of my administration,” Gov. Shumlin said. “This is the only way we will curb the rising cost of health care that gobbles up money faster than Vermonters can make it. Today is the beginning of the rubber hitting the road on cost containment. Our success will mean better health outcomes for Vermonters and the end to health care costs rising faster than our economic growth.”

Investments in infrastructure. To curb spending, Vermont is planning to incorporate old and new ways of making health care more affordable. By investing in the state’s current infrastructure, Shumlin plans to expand the Services and Supports at Home (SASH) program, which already has a track record of saving money while keeping seniors in their home and out of hospitals. Another program Vermont intends to continue with is Medicare participation in the Blueprint for Health, Vermont’s nationally recognized initiative transforming primary care, which has also already demonstrated success. The state also proposes to add Medicare participation in the Hub and Spoke opiate addiction treatment program.

The state is currently in the process of finalizing negotiations of the terms of the all-payer model with the federal government. The information and terms released by Vermont do not represent the final state plan.

Kusserow on Compliance: OIG issues favorable opinion related to patient assistance charitable foundation

The HHS Office of Inspector General (OIG) released Advisory Opinion 15-16 addressing a 501(c)(3) charitable foundation (the “Requestor”) that would seek donations from third parties (including drug manufacturers) and provide financial assistance to out-of-pocket patient expenses for outpatient prescription drugs. The Requestor would maintain two disease funds, one of which would provide assistance to patients with various types of cancer, and the other of which would provide assistance to patients with chronic kidney disease or iron deficiency anemia. The donors could earmark their donations for either fund but would have no control over the specific types of diseases each fund would apply to them.

The OIG concluded that the proposed arrangement would not violate the federal prohibition against inducements to patients with regard to the Civil Money Penalties (CMP) law or the Anti-Kickback Statute (AKS). The OIG cited the following characteristics of the arrangement that led it to its conclusions:

  • No donor, affiliate of any donor, physician, or health care provider would exert direct or indirect control over the Requestor or its program.
  • The Requestor is a nonprofit, tax-exempt charitable organization that operates with absolute, independent, and autonomous discretion as to the use of donor contributions.
  • The Requestor has no financial relationship with any physician or other health care provider that treats patients eligible to receive assistance from the Requestor.
  • Before applying for assistance, each patient already would have selected his or her health care providers, practitioners, or suppliers, and already would have a treatment regimen in place so that the existence of the program would not influence the selection of a provider.
  • The Requestor would not refer patients to, recommend, or arrange for the use of any particular practitioner, provider, supplier, drug, or insurance plan.
  • Donors would not receive any data that would facilitate a donor in correlating the amount or frequency of its donations with the amount or frequency of the use of its drugs or services.
  • No donor or affiliate of any donor would directly or indirectly influence the identification or delineation of the diseases covered by its two disease funds.
  • The determination of a patient’s qualification for assistance would be based solely on financial need, without considering the identity of the health care providers, practitioners, suppliers, drugs, or insurance plans; the identity of any referring party; or the identity of any donor.
  • The Requestor would assist all eligible, financially needy patients on a first-come, first-served basis to the extent funding is available.
  • The Requestor will permit donors to earmark donations for both of the disease funds, which generally should not significantly raise the risk of abuse.
  • Diseases covered by its disease funds: (i) would be defined in accordance with widely recognized clinical standards and in a manner that covers a broad spectrum of available drugs; and (ii) would not be defined by reference to specific symptoms, severity of symptoms, the method of administration of drugs, stages of a particular disease, type of drug treatment, or any other way of narrowing the definition of widely recognized disease states.

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.

Health care organizations team up to fight implied certification theory

A number of interested health care organizations have filed briefs before the U.S. Supreme Court in Universal Health Services v. U.S. ex rel. Escobar, in which the court will consider the theory of implied certification under the False Claims Act (FCA) (31 U.S.C. §3729). Under this theory, claims submitted to the government for reimbursement are tainted by failure to conform to statute, regulations, or provisions that are not considered a condition of payment (see Does fraud go without saying? Supreme Court to examine ‘implied certification’ in FCA, Health Law Daily, December 8, 2015).

Factual background

The case was brought by the parents of a patient who died at a mental health clinic following a seizure. The parents alleged that the caregivers were not supervised as required and that the clinic did not have psychiatrists and psychologists on staff with the credentials required by the state Medicaid program. They claimed that this noncompliance caused claims for payment to be false claims, even though payment was not conditioned upon meeting these particular regulations (see Appeals court takes practical approach to False Claims Act, Health Law Daily,  March 19, 2015).

Whistleblower suits

The health care organizations filing briefs in support of Universal Health Services, like the American Hospital Association, argue that the implied certification theory broadens the reach of the FCA beyond addressing truly fraudulent claims. The American Medical Association’s (AMA) brief notes the sharp increase in qui tam actions filed by relators hoping to obtain “life-changing wealth” by bringing fraud claims based on noncompliance with an underlying regulation, even when the government is satisfied with the original transaction. The organizations believe that the FCA should be used to fight fraud, and the AMA asserts that “imperfect compliance is not equivalent to fraud.”

‘Break out of the silos,’ remove Stark barriers says AHA

The American Hospital Association (AHA) is urging lawmakers to adopt a single broad exception to federal fraud and abuse laws in response to queries on how to improve the physician self-referral (Stark) law under new value-based payment models. In a letter to the House Ways and Means Committee, the AHA claims that, as the reimbursement models are moving to value-based from volume-based, enforcement mechanisms are still rooted to the volume-based approach.

According to the AHA, the Stark law is not the only legal barrier that needs to be addressed. Hospitals, physicians and other health care providers must “break out of the silos” and collaborate as teams to achieve the efficiencies and care improvement goals of the new payment models. To accomplish that goal, the AHA stressed the need for a legal safe zone across the fraud and abuse laws (Stark, anti-kickback and certain civil monetary penalties (CMPs)).

As such, the AHA views Stark as poorly suited to a value-based payment system. The law should not be the central point of oversight for value-based payments, as it was designed to keep hospital and physicians apart through micro-managing compensation arrangements on a strict liability basis.

The AHA supports the creation of an exception under the anti-kickback statute for hospital-physician integrated arrangements designed to achieve the goals of team-based care. In addition, there should be protection for shared savings and incentive programs, as well as any arrangement start-up or support contribution. Any arrangement covered by the exception would be deemed compliant with the Stark law and applicable CMPs.

Moreover, the AHA stated that any requirement governing the form rather than the substance of an arrangement is a technical rather than substantive requirement. Thus, Stark should require that enforcement take into account mitigating factors when a violation does occur. These factors should include: (1) whether the violation is technical or substantive; (2) whether the parties’ failure to meet all the prescribed criteria of an applicable exception was due to an innocent or unintentional mistake; (3) the corrective action taken by the parties; (4) whether the services provided were reasonable and medically necessary; (5) whether access to a physician’s services is required in an emergency situation; or (6) whether the Medicare program suffered any harm beyond the statutory disallowance.