Moratoria on Home Health, Ambulance Enrollment Extended Six Months

Nine moratoria on enrollment of new suppliers of home health and ambulance services in Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP) will be extended for an additional six months, CMS has announced. The Notice of the extension will appear in the Federal Register on Friday, August 1, 2014. Specifically, the moratoria on enrollment of new home health agencies will continue in: (1) Chicago, Illinois; (2) Miami, Florida; (3) Dallas, Texas; (4) Houston, Texas; (5) Detroit, Michigan; (6) Philadelphia, Pennsylvania, including suburban New Jersey; and (7) Fort Lauderdale, Florida. No new suppliers of ambulance services will be enrolled in the metropolitan areas of Philadelphia and Houston.

Legal Basis

Section 6401 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) gave CMS the authority to impose temporary moratoria on the enrollment of new providers or suppliers when it determines that there is a high risk of fraud, waste, or abuse. The moratoria are targeted to specific types of suppliers or providers and specific geographic areas where the incidence of fraud or abuse is especially high. CMS implemented the statute by adopting 42 CFR sec. 424.570.

The first moratoria were imposed on July 31, 2013; they applied to enrollment of home health agencies in the Miami and Chicago metropolitan areas and to enrollment of ambulance services in the Houston, Texas area. These moratoria were extended, and the remaining moratoria were added, by publication in the Federal Register on February 4, 2014. In order to impose or extend a moratorium, CMS must determine that, in addition to the high risk of fraud, waste, or abuse, beneficiaries’ access to care will not be impaired. CMS made the determinations in consultation with state and local Medicaid agencies and law enforcement.

Closing ‘Donut Hole’ Gives Sweet Savings to Part D Recipients

Since 2010, 8.2 million Medicare recipients have saved $11.5 billion on prescription drugs thanks to one provision of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). By closing the “donut hole”—a gap in coverage that required beneficiaries to pay the full costs of certain drugs out of pocket—the ACA has provided an average of $1,407 in savings for each individual Part D recipient. In a press release, HHS Secretary Sylvia Burwell trumpeted this success, saying that the closure of the gap helps the agency in “improving and promoting the best care for people with Medicare.”

Donut Hole

Medicare Part D was created by the Medicare Modernization Act of 2003 (P.L. 108-173). Part D beneficiaries are entitled to lower negotiated prices on generic and brand-name prescription drugs that are (1) approved by the FDA, (2) used and sold in the United States, and (3) used for a medically-accepted reason. When Part D began in 2006, there was a $250 deductible. For costs between $251 and $2,250, beneficiaries had a 25 percent coinsurance payment. Once beneficiaries spent $3,600 out-of-pocket, they were entitled to pay the greater of either $2 for generic drugs and $5 for brand name drugs, or 5 percent of the cost of a drug.

However, for prescription drug costs between $2,251 and $5,100, beneficiaries were required to pay 100 percent of the cost of drugs—that is, when beneficiaries had purchased drugs in excess of the 25 percent coinsurance threshold, but before they had spent $3,600 out-of-pocket. This gap in coverage is referred to as the “donut hole.” Subsequently, the deductible, coverage limit, out-of-pocket threshold, and cost-sharing amounts have been annually adjusted, but the existence of the donut hole gap has remained; in 2014, the donut hole begins when a beneficiary has prescription drug costs above $2,850 and ends when the beneficiary has spent $4,550 out-of-pocket.

Closing the Donut Hole

The ACA contained provisions to gradually relieve the burden of the donut hole for Part D beneficiaries. In 2010, beneficiaries who hit the donut hole received a $250 rebate. Thereafter, beneficiaries began to receive an annually-increasing percentage discount from drug manufacturers while in the donut hole. By 2020, the ACA will have completely closed the donut hole, and beneficiaries will have a 25 percent coinsurance rate for all prescription drugs after they pay the annual deductible.


Since the ACA began closing the donut hole, CMS says “more than 8.2 million seniors and people with disabilities with Medicare have saved over $11.5 billion on prescription drugs since 2010 as a result of discounts in the donut hole and rebates in 2010, for an average of $1,407.” This represents an increase of 1.6 million individuals and $4.5 billion in savings from this time in 2013, when individuals had saved an average of $1,061. CMS also provided a savings summary breaking down donut hole discounts by state for 2014 and overall since 2010.

Little Progress in Reducing Deaths from Preventable Medical Errors

While progress is being made in certain areas of preventable hospital errors, such as dramatic reductions in the rate of central line infections and other hospital associated infections, the overall death rate from preventable medical errors  has not decreased much since the Institutes of Medicine’s (IOM) landmark report, To Err is Human was released nearly 15 years ago. This was the conclusion of a panel of medical experts who testified before the Subcommittee on Primary Health and Aging of the Senate’s Committee on Health, Education, Labor and Pensions at a hearing on July 17, 2014. In fact, the rate may even have increased.

Preventable Errors

Witnesses referred to three studies conducted  from 2011 to 2013 which showed that the number of deaths at hospitals from preventable errors may actually be as high as 400,000 annually, which is significantly higher than the 98,000 annual deaths the IOM report estimated.  The 400,000 number comes from a study conducted by Dr. John James which was published in the Journal of Patient Safety in September of 2013.  Dr. James testified that he got to that number from some pretty simple math. “There were 34 million hospitalizations in 2007, of which approximately 0.9% involved lethal adverse events, and of those approximately 69 percent on average were judged to be preventable,” said Dr. James during his testimony.  He concluded that this leads to 210,000 deaths from preventable medical errors. When he corrected for the missed deaths from medical errors that current tools do not catch, the number came out to be something more like 400,000 lives which “are shortened by preventable adverse event each year,” he stated.

HHS’ Office of the Inspector General estimated that medical errors caused the deaths of nearly 180,000 deaths to Medicare beneficiaries each year in a November 2011 report based on 2008 data, according to Dr. Ashish K. Jha who is also a professor of Health Policy and Management at the Harvard School of Public Health.  Again that number is significantly higher than the 98,000 estimated by the IOM.  Finally a New England Journal of Medicine study of hospitals in North Carolina “showed that there had been little evidence that harm had decreased substantially over the 6-year period,” according to the testimony of Lisa McGiffert, Director of Patient Safety for Consumers Union.


Among the recommendations to reduce this number was better reporting of medical errors, transparency of that reporting to the public and the use of software to go through electronic medical records to uncover medical errors.  All of the witnesses provided anecdotal evidence of medical errors that lead to death, but would not be reported using existing  reporting requirements and software.

One recommendation made by Dr. James and Lisa McGiffert was the establishment of a National Patient Safety Board similar to the National Transportation Safety Board.  The National Patient Safety Board would track the any fragmented safety programs and provide a comprehensive coordinated approach to reducing the number of medical errors, said McGiffert.

Transparency and the public availability of safety data was a recommendation made by Dr. James. He stated that patients have a right to know the safety record of their physicians and facilities where they receive care such as outpatient clinics and nursing homes as well as hospitals.   Dr. Jha recommended more mining of electronic health records to obtain evidence of medical errors. He pointed out that software currently exists that uses data in medical records to identify when a medical error occurred.  Dr. Jha advocated requiring the use of these tools for automated patient safety monitoring  as a part of the meaningful use requirements predicting that it would have a dramatic effect on the reporting of the number of medical errors.

These recommendations were advocated by the witnesses because each related a story of a person  who died as a result of a medical error in a hospital that would never have been reported as a medical error under the current reporting mechanisms.  Dr. James became an advocate of patient safety after his son died due to a medical error.  Dr. James discovered the error by examining his son’s medical records and saw that another physician missed prescribing an essential medication. Dr. James’ point though was that with the current reporting requirements, the failure of one of his son’s doctors to prescribe a medication would not have been reported as a medical error, even though an examination of the medical record indicated it was.

Younger People Travel to Urban Hospitals for Care

In 2010, 6.1 million people who lived in rural areas were hospitalized, and of that number 60 percent sought care at hospitals in rural areas and 40 percent traveled to urban areas for hospital services, according a new report from the Centers of Disease Control and Prevention (CDC). The report, Rural Residents Who Are Hospitalized in Rural and Urban Hospitals: United States, 2010, examined the differences in who sought care in urban areas as opposed to rural areas, what type of care was provided by hospitals in both regions to rural residents, and what type of care settings rural residents were discharged to by urban and rural hospitals. Interestingly, the death rate of rural residents admitted to a hospital in an urban area was the same as a rural resident admitted to hospital in a rural area; 2 percent.

Travel for Care

Elderly rural residents seek care in rural areas, according to the CDC’s report. Roughly 51 percent of rural residents 65 years or older who were hospitalized in 2010 were hospitalized in a rural hospital. A majority of rural residents who were hospitalized in 2010 and were 64 years of age or younger were hospitalized in an urban hospital. The CDC stated that prior research showed that older patients (patients over 65 years of age) were less likely to travelfor hospital services due, in part, to barriers imposed by traveling to urban areas and a preference to remain closer to their homes.

Service Received

A little more than one-third, 38 percent, of rural residents hospitalized in a rural hospital received surgical or nonsurgical procedure during their stay. Rural residents hospitalized in urban hospitals received far more surgical and non-surgical services. Seventy-four percent of rural residents in an urban hospital received a surgical or nonsurgical procedure, and rural residents in urban hospitals were three times as more likely to receive three or more procedures than rural residents in rural hospitals. The CDC referred to a study that showed that due to economies of scale and volume of patients, many rural hospitals do not offer many types of diagnostic tests or specialized treatments.


Rural residents in rural hospitals were less likely to be discharged to their home and more likely to be discharged to another short-term hospital or to a long-term care institution. Only 63 percent of rural residents receiving care a rural hospital were discharged to their home while 81 percent of rural residents in urban hospitals were discharged to their home. Only 3 percent of rural residents in an urban hospital were transferred to another short-term hospital while 7 percent of rural residents in a rural hospital were transferred to another short-term hospital. Repeating the pattern, 14 percent of rural residents who received services from a hospital in a rural area were discharged to a long-term care institution, while only 8 percent of rural residents who received care in an urban hospital were discharged to a long-term care institution.

Earlier Study

The CDC used data from the National Hospital Discharge Survey, which has been conducted annually from 1965 through 2010, for this study. An earlier study by the CDC using the same data showed that overall only 12 percent of the 35 million hospitalization in the U.S. in 2010 were in rural hospitals (see Rural hospitals serve fewer patients, perform fewer services that urban counterparts, reported on April 24, 2014). The earlier report found that the percentage of rural hospitalizations was not only slightly less than the overall rural population, which in 2010 was 17 percent of the country. Data from that study also determined that fewer services were performed in rural hospitals, with only 6 percent of the 51 million inpatient medical procedures performed in 2010 occurring in rural hospitals.