Overworked from budget passage, Senate recesses before SGR repeal vote

The Senate is going to wait more than two weeks before its takes action on a bill to repeal the Medicare sustainable growth rate (SGR) and avoid an imminent 21 percent cut in Medicare payments to physicians. Despite the fact that the physician pay cuts are scheduled to take place on April 1, 2015, Senate Republican and Democratic leaders announced that they would not take up the SGR issue until April 13, 2015. There was some advance warning for Medicare physicians. On March 24, 2015, CMS emailed physicians to warn them that the agency was preparing to implement the payment reduction as of April 1, 2015. At that time, CMS informed doctors that it would update them again on April 11, 2015 (see Countdown to April 1: CMS, docs prepare for cut in case SGR isn’t fixed, Health Law Daily, March 25, 2015).

H.R. 2

On March 26, 2015, the House passed H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015. If enacted, the bill would make changes to the Medicare physician payment system, notably through the SGR repeal, but would also extend several other expiring Medicare provisions. Additionally, the bill would make permanent certain Medicaid benefits, including the benefits for “qualified individuals” and the transitional medical assistance program (see House passes SGR repeal, March 26, 2015)


Following the House passage and President Obama’s endorsement of the bill, all that remains for final approval is a Senate vote. However, on Friday, the Senate took up a long session that led to the passage of the Senate budget resolution (see House passes budget, Senate to vote, and ACA remains in the crosshairs, Health Law Daily, March 26, 2015). Now, the Medicare payment issue will have to endure a two-week lapse, while Senators take a recess, before it goes under further consideration. Despite the time lag, Senate Majority Leader Mitch McConnell (R-Ky) indicated that the delay would not result in lower payments to Medicare physicians, explaining that the lag time that is inherent in Medicare payment processing means that the payment fix can be done a little late.


The Senate has received some backlash as a result of its decision not to move ahead with the SGR repeal immediately. Congressman Kevin Brady, (R-Texas) had strong words for the decision, saying “The Senate shouldn’t have left town without acting. I embrace the assurances they’ll act next month, but it’s hard to find an adequate reason for leaving our local Medicare seniors and doctors in yet another lurch, or delaying the first real reforms to save Medicare for the long term.” Additionally, the American College of Physicians (ACP) expressed disappointment that the Senate took a recess before passing the legislation and said that “doctors and patients must hold the Senate accountable for not passing SGR repeal.”

Kusserow on Compliance: Advice on selecting an Independent Review Organization (IRO)

The HHS Office of Inspector General (OIG) has over 300 active Corporate Integrity Agreements (CIAs) in force. They result from a settlement of a civil false claims case with the Department of Justice (DOJ). Under a CIA, a provider or entity consents to certain defined obligations as part of “the civil settlement and in exchange for the OIG’s agreement not to seek an exclusion of that health care provider or entity from participation in Medicare, Medicaid, and other federal health care programs.” The CIAs normally are five years in duration and include requirements for an Independent Review Organization (IRO) to ensure compliance with its terms and requirements that include addressing the specific issues that gave rise to the settlement (physician arrangements, off-label use of drugs, inappropriate billing, or marketing practices, etc.).

Financial audits are not normally part of the agreement; as such, IROs usually are firms with expert health care consultants, rather than financial auditors. IRO selection is a critical decision process that should not be taken lightly. The wrong IRO can also prove to be a very costly both in terms of what they charge and how they perform their services, but also in the credibility and quality of their work. It is the responsibility of the entity, not the OIG, to select the IRO. The OIG does not provide advice on how to select one or endorse any organizations to be the IRO, however it reserves the right to approve or deny the entities or provider’s choice of IRO, if found deficient in meeting its guidelines. This is done within 30 days after it receives written notice of the identity of the IRO. Any problems the OIG finds with an IRO will reflect badly on the organization and could aggravate matters.

Thomas Herrmann, J.D., is an expert without peer with regards to IROs, as result of having been previously responsible on behalf of the OIG for negotiating CIAs and monitoring compliance; and subsequently, as years of experience as a consultant involved in more than a dozen IRO engagements. He offered the following advice in selecting the right IRO to oversee an organization’s compliance with the terms and conditions of a CIA:

  • Select a firm that is highly experienced as having served as an IRO to ensure effective reporting and communication with both the entity and the OIG. Expecting a firm to have so served as an IRO six or more times is not unreasonable.
  • Find a firm with many years of health care experience, the more the better, in the particular healthcare sector (there is a huge difference between a provider, managed care organization, and a pharmaceutical manufacturing company). This should not be a learning opportunity at the entity’s expense.
  • Ensure the prospective IRO has the specific qualifications and expertise to properly address the specific scope of work under the CIA. These vary considerably and the more complex a case, the more important that the IRO be highly experienced in that area. Absence of program expertise can lead to hidden costs in learning the business and may result in difficulties meeting the obligations and possibly in terms of credibility in the eyes of the OIG.
  • Require references where the prospective IRO served in that capacity in the past to find out what kind of job they have done, professionally, competently, reasonably, and without up charging unreasonably over their estimate.
  • Avoid a “bait and switch” wherein the people negotiating to become the IRO are quickly switched to lesser qualified individuals to perform the work. Insist on the prospective IRO to specifically identify the key persons assigned to the engagement, along with their personal qualifications.
  • Require written attestation that they have no conflicts of interest problem. The OIG has enumerated many examples of conflict of interest, but, in short, this means that the IRO cannot be involved in reviewing any work in which they had a role in developing and must not have their work conflict with any previous work they have done with the entity. Even the appearance of conflict can be a serious problem.
  • Require the IRO to agree in writing that they will meet the OIG required General Accountability Office (GAO) “Generally Accepted Government Audit Standards” for operational reviews. Operational reviews and financial reviews are dealt with separately in those standards.
  • Fee rates and charges can range considerably and it is important to consider that cost right alongside of experience, professionalism, and industry knowledge.

For more information on this topic, please consider registering for the upcoming WK webinar, “CIA Lessons Learned—Negotiating Terms, Selecting an IRO, Meeting Obligations”, featuring Richard Kusserow.

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 © 2015 Strategic Management Services, LLC. Published with permission.


Network kickoff highlights nationwide payment reform

President Obama, HHS Secretary Sylvia Burwell, and a host of other health care payers, providers, state representatives, and patient advocates launched the Health Care Payment Learning and Action Network (HCPLAN) on March 25, 2015, HHS announced. HCPLAN is an effort to spread the achievements and lesson s learned from the first five years of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) to lower costs and improve quality by using alternative payment models, which tie payment to value and health outcomes rather than the volume of services delivered.

Short-term goals

Secretary Burwell has set a goal for 30 percent of all Medicare payments to be based on alternative payment models by 2016 and 50 percent by 2018. At the kickoff gathering, she urged private sector payers to match or beat the Medicare goals.

ACA implementation

The ACA introduced several payment reforms that have already been effective at saving both lives and money, according to HHS. The efforts to reduce hospital-acquired conditions (HACs) and to prevent readmissions within 30 days of discharge from the hospital both have generated significant results. Between 2010 and 2013, HACs dropped 17 percent, resulting in 50,000 fewer patient deaths and avoiding $12 billion in health care costs. Similarly, the readmission rate dropped by about 8 percent in 2012 and 2013, resulting in 150,000 fewer readmissions. According to HHS, the accountable care organization programs have saved $417 million in Medicare spending.

Network activities

An HCPLAN contractor will serve as a “convener,” bringing network participants together in working groups, webinars, and large meetings to discuss best practices and whether variations among payment models can be harmonized. The HCPLAN also will provide support to a guiding committee and work groups, which will propose priorities and write summary papers.


As of the date of launch, more than 2,800 organizations and individuals have registered to participate in HCPLAN. MITRE has been chosen as the contractor for the Network. Active participants include the American College of Physicians, the American Cancer Society, Caesars Entertainment, Cigna, the State of Delaware, Dignity Health, and RiteAid. Caesars is testing a bundled payment model for hip and knee replacements, which will base payment on outcomes and could dramatically reduce patients’ cost sharing.

All participants are expected to subscribe to the goals and to work on a project to fulfil them. Most meetings will be held via webinar or teleconference. Additional information about the operation of the HCPLAN is available at http://innovation.cms.gov/initiatives/Health-Care-Payment-Learning-and-Action-Network/.

The Affordable Care Act at age five: a look back and a look ahead

Somewhere near their first birthdays, children learn to walk. At three years of age, they might start pedaling a tricycle, and at age five, they are poised to enter kindergarten. March 23, 2015, marks the fifth anniversary of the enactment of President Obama’s signature health reform law, the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Has the ACA, at five years of age, made the same amount of progress as a child?

Critics argue that the ACA has failed, but proponents say that it is moving closer to achieving its goal of quality, affordable health care for all Americans. As a law that seeks to expand health insurance coverage for Americans, improve the functioning of health insurance markets, and control the efficiency and quality of health care, the ACA has “had a major positive impact, and one that will continue to bring efficiencies over time,” said Keith Fontenot, the managing director of government relations and public policy at Hooper, Lundy & Bookman, P.C.

Regardless of whether it has met its milestones, it is clear that the ACA has already made an impact. It has had significant effects on the uninsured rate, the affordability of coverage via the provision of subsidies, the use of preventive services, and the actions of large employers and insurers. Many ACA provisions have gone into effect over the last five years; however, due to design or delay, a number of significant reforms have yet to be implemented or fully realized.

This White Paper looks at the ACA’s impact on Medicare and Medicaid issues and its impact on the private insurance market. It also looks at major ACA changes facing health care providers and employers in the coming months.

Read further, “The Affordable Care Act at age five: a look back and a look ahead.”