CMS Announces “Investment Model” ACO Funding

CMS will award funding for a new Accountable Care Organization (ACO) innovation model, the Investment Model, beginning January 1, 2016. The Investment Model builds on previous work with advance payments in the shared savings program. This model addresses the need for capital to invest in the equipment and training needed to manage the care of a patient population while increasing the level of financial risk in response to stakeholder concerns.

Two Groups of ACOs

Two groups of ACOs will be eligible to apply for funding under the Investment Model. ACOs that already are participating in the shared savings program may apply from October 15, 2014 to December 1, 2014. CMS will accept applications from new ACOs that will begin participation on January 1, 2016 and ACOs that began participation during 2014 in the summer of 2015.

Types of Payments

Both groups of ACOs will receive two types of variable payments: one “up-front” payment and one monthly payment. Both variable payments will be based on the number of Medicare beneficiaries preliminarily and prospectively assigned to the ACO. The new ACOs also will receive a fixed up-front payment.

Eligibility Requirements

To participate in the Investment Model, ACOs must be accepted into the Medicare shared savings program. ACOs that entered the program in 2012, 2013, or 2014 must have submitted complete and accurate quality reports during the most recent performance year. In addition, the ACO must not: (1) have been assigned more than 10,000 beneficiaries; (2) include hospital participants providers except for critical access hospitals (CAHs) or prospective payment system hospitals with no more than 100 beds; (3) be operated either wholly or in part by a health plan; and (4) have participated in the Advance Payment Program.

Preferences

In its selection process, CMS will favor new ACOs in rural areas and other areas with low penetration and existing ACOs that agree to increase their level of financial risk. It also will give preference to ACOs that have provided high quality care, achieved their financial benchmarks, demonstrated exceptional financial need, or “presented compelling proposals” for the investment of both their own and CMS funds.

Ebola Preparedness Guidelines May Have Come Too Late

In an urgent effort to warn hospital health care personnel about recognizing symptoms and patterns of the Ebola virus, CMS issued a survey and certification memorandum articulating the Centers for Disease Prevention and Control’s (CDC) health advisory alert to state survey agency directors. The CDC’s October 2, 2014, alert came days after a Liberian man died from the virus in Dallas, Texas, exposing health care workers and family members to the deadly disease.

The CDC outlined the following evaluative and preventive guidelines for hospitals and critical access hospitals (CAHs):

  • Increased awareness of those traveling from West Africa within a 21-day period for anyone with a fever or other Ebola symptoms;
  • Patient isolation into a private room with bathroom for anyone who has traveled to or from West Africa and exhibits Ebola symptoms;
  • Immediate notification to local and state health departments;
  • Use of appropriate personal protective equipment (PPE), including gowns, face mask, eye protection, and gloves;
  • Vigilant monitoring for Ebola infection symptoms such as fever greater than 100.4°F (38°C), severe headache, muscle pain, vomiting, diarrhea, abdominal pain, or unexplained hemorrhaging;
  • Knowledge of Ebola’s incubation period (typically 8 to 10 days, but can range from 2 to 21 days); and
  • Knowledge of patterns of exposure that are either high-risk (needle sticks, mucous membrane contact with blood or body fluids, and direct skin contact with, or exposure to blood or body fluids of, an infected patient) or low-risk (brief direct contact such as hand shaking or being around infected patients who have been in the care area for a prolonged period of time without wearing proper PPE).

CMS has been urging hospitals and CAHs to immediately adopt these procedures, particularly in their emergency and other outpatient departments. Following protocol is key, since two hospital care givers who treated the Liberian man, Thomas Eric Duncan, have contracted Ebola. One of the health care workers was a 26-year-old nurse who provided care that included invasive dialysis procedures and use of a ventilator during Duncan’s hospital stay.

The protocols, however, may not be enough. CNN reported that Texas Health Presbyterian Hospital Dallas nurses have complained that guidance continually changed, and there were no up-to-date protocols available when Duncan was at the hospital. The nurses claim that Duncan was left in an open area, that their PPE exposed their necks, and there was no mandate for them to attend training. Further, the second 29-year-old nurse flew the next day between Cleveland and Texas after treating Duncan.

Regarding the infected nurse, the Washington Post reported on October 14, 2014, that CDC director Tom Frieden affirmed that a “breach in protocol resulted in this infection.”

The CMS memorandum provided a link to an Ebola detection checklist, but it is not mandatory or federally regulated. The checklist covers review of triage procedures, post-screening criteria, adequate training, and preparation of isolation, quarantine, and exposure reports. CMS also cited the CDC’s website for updates to affected countries, but again, the memorandum was issued days after Duncan’s visit.

The CDC and CMS will need to move faster as any changes in guidance arise. Whether current protocols will contain the Ebola virus remains to be seen, as it is likely more health care workers at the Dallas hospital will contract the disease.

 

 

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.

Kusserow’s Corner: Pharmaceutical Manufacturer Co-Payment Coupons May Violate the Anti-Kickback Statute

The HHS Office of Inspector General (OIG) issued a Special Advisory Bulletin regarding Pharmaceutical Manufacturer Coupons. The Bulletin put pharmaceutical manufacturers on notice that offering such coupons can be considered an improper inducement that could implicate the federal Anti-Kickback Statute (AKS). The AKS prohibits the knowing and willful offer or payment of remuneration to a person to induce the purchase of any item or service for which payment may be made by a federal health care program. Manufacturers may be liable under the statute if they offer coupons to induce the purchase of drugs paid for by federal health care programs, including Medicare Part D. The OIG Advisory Bulletin was released along with a report by their Office of Evaluation and Inspections (OEI) that focused on the fact that many pharmaceutical manufacturers are offering coupons to reduce or eliminate the cost of patients’ out-of-pocket copayments for specific brand name drugs. While the OIG acknowledged in the Bulletin that copayment coupons may encourage beneficiary adherence to medication regimens (particularly in cases of high copayment obligations), those benefits did not appear to outweigh its concerns, and the OIG reminded manufacturers that the manufacturers can donate to independent charities that provide financial support to patients without regard for the patient’s specific medication requirements.

OEI Report

The OEI focused on whether there are safeguards in place to prevent their copayment coupons from being used for drugs paid for by Part D, and identifying any vulnerability in those safeguards. Such use may cause beneficiaries to choose more expensive brand-name drugs over generics and therefore impose significant costs on the Part D program. The report assessed the safeguards that pharmaceutical manufacturers employ to prevent use of copayment coupons by Part D beneficiaries and identified two primary safeguards: (a) notices to federal health care program beneficiaries and pharmacists that the copayment coupon may not be used to purchase drugs paid for by a federal health care program; and (b) manufacturers’ use of pharmacy claims edits. OEI found:

  1. Use of coupons by Medicare beneficiaries could impose significant costs on the Part D program because many coupons encourage beneficiaries to choose more expensive brand name drugs over less expensive alternative drugs.
  2. Notices were by manufacturers inconspicuous and they had lack of access to Part D enrollment status data and resulting reliance on “proxies” to approximate Part D coverage.
  3. Manufacturers were unable to verify accuracy of claims edits because they do not audit the process.
  4. Current safeguards may not prevent all copayment coupons from being used for drugs paid for by Part D and as a result, pharmaceutical manufacturers are at risk of enforcement actions under the AKS.

A final point made by the reports was that primary insurers, including Part D plans, cannot undertake their own independent review of copayment coupon use by their beneficiaries because the coupons are typically processed as secondary insurance claims. The OIG recommended that CMS cooperate with industry stakeholders to identify potential solutions that will ensure coupons are not used for drugs paid for by Part D, including CMS’s facilitating verification of Part D enrollment and improving transparency of pharmacy claims data so Part D plans and other entities can more easily identify when coupons have been applied. CMS concurred in this recommendation. However, regardless of future actions by CMS, the offerors of coupons ultimately bear the responsibility to operate these programs in compliance with Federal law. Pharmaceutical manufacturers that offer copayment coupons may be subject to sanctions if they fail to take appropriate steps to ensure that such coupons do not induce the purchase of Federal health care program items or services, including, but not limited to, drugs paid for by Medicare Part D. Failure to take such steps may be evidence of intent to induce the purchase of drugs paid for by these programs, in violation of the AKS.

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 © 2014 Strategic Management Services, LLC. Published with permission.