MedPAC votes to recommend recalculation of MA benchmarks

The Medicare Payment Advisory Commission (MedPAC) unanimously voted to recommend that the HHS Secretary modify the calculation of Medicare Advantage (MA) benchmarks. The recommended change, discussed at the January 12, 2017, MedPAC meeting, would increase spending between $750 million and $2 billion over one year and between $5 billion to $10 billion over five years. Mark Miller, executive director of MedPAC, suggested, however, that previous coding recommendations from the June 2016 report could offset the increased cost.

CMS sets the MA county benchmark based on the average risk-adjusted per capita Part A and Part B fee-for-service (FFS) spending in the county. While this calculation includes all beneficiaries in Part A or Part B, MA enrollees must be in both Part A and Part B. MedPAC policy analyst Scott Harrison noted that 12 percent of FFS beneficiaries are enrolled in Part A only, and Part A-only beneficiaries spend less than half than what those with Part A and Part B spend on Part A. This, he said results in an underestimate of FFS spending compared to MA spending, which leads, in turn, to an understatement of MA benchmarks.

To make calculations more reflective of MA enrollment, the members voted on a draft recommendation, which they also discussed at the December 2016 meeting, that the HHS Secretary should calculate MA benchmarks using FFS spending data only for beneficiaries enrolled in both Part A and Part B.

CMS already adjusts the rate calculation in Puerto Rico so that it is based on beneficiaries who are enrolled in both Part A and Part B. In the April 2016 Announcement of Calendar Year 2017 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter, CMS stated in response to a comment that it would consider expanding this Part A and Part B adjustment to all counties in the future.

At the same meeting, MedPAC also voted to recommend that the Secretary should require hospitals to add a modifier on claims for all surgical services provided at off-campus, stand-alone emergency department facilities. The modifier would allow Congress and CMS to track the growth of off-campus emergency departments, which are reimbursed at higher rates than urgent care centers.

FDA, CMS facilitate continuity between approval of, payment for medical products

Fragmentation in the process of approving and clearing drugs for marketing by the FDA and then clearing drugs for coverage by CMS has led to questions regarding whether FDA approval necessarily results in approval for coverage and payment under Medicare and Medicaid. In a Journal of the American Medical Association (JAMA) perspective written by CMS Acting Administrator Andy Slavitt, FDA Commissioner Robert Califf, and FDA Deputy Commissioner for Medical Products and Tobacco Rachel Sherman, the authors posit that, despite such challenges, changes in the organization of health care and the larger technology landscape should allow the FDA and CMS to move toward the use of shared sources of evidence while still applying the most appropriate criteria to decision making.

In product approval and clearance for marketing by the FDA and in coverage and payment determinations by CMS, the agencies use scientific evidence to make determinations. The use of shared sources of evidence would help to reduce gaps in information that could lead to uncertainty in the approval or clearance of new therapies, as well as their subsequent use in medical treatment. Shared information would also increase efficiency in medical product development and ensure the use of high-quality evidence.

It is standard practice to use in the approval and clearance for marketing process research examining the effects of therapeutics in narrow, strictly delineated populations that may not reflect the clinical practice settings in which the products will be used. The authors stressed that when a product demonstrates promise in this narrow setting, developers should pivot quickly toward evaluating the product, using “evidence about the risks and benefits of tangible health outcomes in clinical settings and among patients representative of those who will actually use these products.” The expansion of the scope of research used in the approval and clearance process will help show how a product is likely to perform and how to utilize the product in treatment.  Garnering early involvement of health systems and payers will help the agencies to determine what kinds of evidence are needed to incorporate the product in practice, where the product fits in formularies and device inventories, and whether or how much to pay for its use.

The FDA and CMS are focusing on the following to ensure that adequate evidence is available to guide patients, clinicians, and payers in their choices:

  • clarifying the need for including diverse populations and measuring relevant clinical outcomes within the trials conducted for regulatory approval and to inform labeling;
  • collaborating with other federal agencies to build functional links across a range of systems to make the best use of existing digital information captured in the course of health care delivery, such as electronic health records, insurance claims, and data within clinical registries; and
  • ensuring broad collaboration across public and private sectors.

Kusserow on Compliance: CMS continued to pay millions of dollars for incarcerated beneficiaries

A couple years ago the OIG issued a report, followed by a public outcry about Medicare paying claims for incarcerated beneficiaries. The simple fact is that those in custody of a governmental entity are not eligible for Medicare. Last year Congress passed a law mandating CMS to establish policies and implement claims audits to ensure that payments are not made for Medicare services rendered to incarcerated beneficiaries and steps to detect and recoup payments made for instances in which an individual’s incarcerated status is not updated on CMS’s data systems. Under the same law, the OIG was mandated to submit a report to Congress within 18 months of passage, and periodically thereafter, on CMS actions to prevent payments made for incarcerated beneficiaries. The OIG issued an audit report on their evaluation of 2015 CMS policies and procedures and their planned revisions to them. They compared this information against requirements prohibiting payment for Medicare services rendered to incarcerated beneficiaries.

OIG findings

  1. CMS’s is not in full compliance with Medicare requirements.
  2. CMS failed to detect and recoup improper payments on behalf of incarcerated beneficiaries because they turned off its post payment claims edit to identify those claims.
  3. Medicare paid 63,949 claims of 11,786 incarcerated beneficiaries ($34,588,984) CY 2013-2014.
  4. CMS has not taken steps to act on the identified potentially improper payments.
  5. Failure to detect occurred in September 2013 when CMS turned off a post payment claims edit that it had created in April 2013.
  6. CMS planned revisions to its policies and procedures to deny Medicare payments for the same period that SSA suspends its benefits does not comply with the legal mandates.

OIG recommendations

CMS did not concur with the first recommendation listed below but did so for the other two.

  1. Develop and implement a system that allows CMS to collect the information necessary to fully comply with Medicare requirements that prohibit payment for Medicare services rendered to incarcerated beneficiaries and, if necessary, seek the appropriate legislation and funding;
  2. Review the $34.6 million in claims to determine which portion, if any, was not claimed in accordance with Medicare requirements and direct the Medicare contractors to recoup any ensuing improper payments; and
  3. Identify improper payments made on behalf of incarcerated beneficiaries after our audit period and ensure that Medicare contractors recoup those payments.

CMS officials stated that CMS is planning to obtain the dates that SSA uses to suspend benefits and plans to deny Medicare payments for incarcerated beneficiaries for the same periods that SSA suspends its own benefits for the same individuals.

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.

Committee hearing takes a long view at long-term care

Proposals to improve the financing and delivery of long-term care (LTC) were considered at a House hearing held by the Energy and Commerce Committee’s Health subcommittee. The subcommittee heard testimony from experts in the field who addressed the need for accessible LTC as Americans are growing older. In addition to addressing the changing demographic problem, the witnesses testified as to new financing strategies, including new models of LTC insurance. Committee chairman Joe Pitts (R-Pa) noted that the hearing was designed to exam the state of the LTC and to find a viable long-term solution.

Status quo

Congresswoman Doris Matsui (D-Calif) noted that the current financing system relies too heavily on the unpaid labor of 52 million individuals who care for their ailing family members or friends. Matsui also noted that the costs of LTC are placing too great a strain on Medicaid, which is the single largest payer of LTC services. She also made clear that under the current system, despite misconceptions to the contrary, Medicare pays for LTC in very limited circumstances.

An insurable risk

William Scanlon, a Consultant at the West Health Institute and National Health Policy Forum and the former managing director of Health Care Issues as the US General Accounting Office, testified that a financing solution based upon efficiencies found in the delivery or payment process is unlikely to succeed. Scanlon testified that insurance is a solution and that LTC makes sense as an insurable risk because the need for LTC services is not a certainty. He noted that “for persons turning 65 between 2015 and 2019, almost half (48 percent) will have zero LTC expenses before they die.” He explained that an individual benefits more from insurance than by saving for LTC expenses because there is a high probability that all or most of the monies saved in anticipation of LTC expenses would remain unused when the individual dies. Despite the advantages, Scanlon testified that only 3 percent of adults and 11 percent of adults over 65 have a private LTC insurance policy.

Reforms

Alice Rivlin, Co-Chair of the Long-Term Care Initiative at the Bipartisan Policy Center testified as to four proposals to reform the system. One of those ideas, based upon the notion that LTC should be an insurable risk, is to make private LTC insurance more available and accessible. She also recommended the design of a federal LTC insurance option for individuals with catastrophic costs. She encouraged lawmakers to streamline Medicaid home and community-based care options to encourage effective care in lower cost settings. Her final recommendation was to ensure that working people with disabilities do not lose access to LTC services as their earnings increase.

Insurance models

Anne Tumlinson, the CEO of Anne Tumlinson Innovations LLC and Founder of Daughterhood.org, reiterated the problem of unpaid labor in her testimony, noting that while the U.S. spends $200 billion each year on LTC, the country relies on nearly $500 billion in unpaid family care. To solve the problem, Tumlinson discussed three insurance approaches: comprehensive, front-end, and catastrophic. She explained that each variety of insurance involved certain trade-offs like higher costs and limited coverage. Although she acknowledged that reform would be difficult, Tumlinson told lawmakers “we cannot afford to give up.”