Kusserow on Compliance: Three new projects added to the OIG Work Plan in April

The OIG regularly updates its Work Plan as it continues to assess relative risks in HHS programs and operations that may lead to new projects. The most recent changes involved adding six new projects to the OIG’s audits and evaluations that are planned or underway. In making these additions, the OIG considered a number of factors, including mandates set forth in laws, regulations, or other directives; requests by Congress, HHS management, or the Office of Management and Budget; top management and performance challenges facing HHS; work performed by other oversight organizations (e.g., the GAO); management’s actions to implement OIG recommendations from previous reviews; and potential for positive impact.

New Projects Added

  1. Medicaid Nursing Home Supplemental Payments will be reviewed by the Office of Audit Services for completion in fiscal year (FY) 2019. Prior OIG and GAO audits have found that Federal supplemental payments often benefit the state and local governments more than the nursing homes. The OIG plans to review the nursing home supplemental payment program’s flow of funding and determine how the funds are being used. CMS approved a nursing home supplemental payment program in certain states that pays the difference between Medicare and Medicaid rates for nursing home services. In some of these programs, local governments fund the states’ share of the supplemental payments through intergovernmental transfers.

 

  1. The OIG plans to review the extent to which drug formularies developed by Part D sponsors include drugs commonly used by dual-eligible beneficiaries as required. The Patient Protection and Affordable Care Act (ACA), under Section 3313, requires OIG to conduct this review annually. This will be the eighth report issued. The work will be performed by the Office of Evaluation and Inspections with a target completion date of FY 2018.

 

  1. Audit of CMS Medicare Overpayment Recoveries Related to Prior OIG Recommendations, targeted for completion in FY 2019. In the last couple of years, the OIG issued 153 audit reports that related to the Medicare program, containing 193 monetary recommendations totaling $648 million. Of the $648 million in recommended overpayment recoveries, CMS agreed to collect $566 million applicable to 190 recommendations. The OIG plans to determine the extent to which CMS: (1) collected agreed upon Medicare overpayments identified in OIG audit reports and (2) took corrective action in response to the recommendations in a prior audit report examining CMS’ overpayment recoveries (A-04-10-03059). In that report, OIG recommended CMS enhance its systems and procedures for recording, collecting, and reporting overpayments. The OIG also recommended that CMS provide guidance to its contractors on how to document that overpayments were actually collected.

 

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 © 2018 Strategic Management Services, LLC. Published with permission.

CY 2019 Medicare Part C and D policy changes and updates finalized

CMS has issued a Final rule making revisions to the Medicare Advantage (MA) (Part C) and prescription drug benefit (Part D) programs based on its continued experience in the administration of these programs and to implement certain provisions of the Comprehensive Addiction and Recovery Act of 2016 (CARA) (P.L. 114-198) and the 21st Century Cures Act (P.L. 114-255). The major provisions of the Final rule include: (1) the implementation of the CARA provisions governing the establishment of drug management programs, (2) revisions to timing and method of disclosure requirements for MA and Part D plans, and (3) preclusion list requirements for prescribers in Part D and individuals and entities in MA, cost plans, and Programs of All-Inclusive Care for the Elderly (PACE) (Final rule, 83 FR 16440, April 16, 2018).

On November 28, 2017, CMS published the Proposed rule (see Proposed CY 2019 Part C and D changes address opioid misuse and numerous other policy concerns, Health Law Daily, November 17, 2017). While this Final rule finalizes several of the provisions from the Proposed rule, there are a number of provisions from the Proposed rule that CMS intends to address later and a few that it does not intend to finalize. These provisions are discussed in the Final rule.

CARA provisions

CARA includes new authority for Part D plans to establish drug management programs effective on or after January 1, 2019. This Final rule establishes a framework under which Part D plan sponsors may establish a drug management program for beneficiaries at risk for prescription drug abuse or misuse, or “at-risk beneficiaries.” Specifically, under drug management programs, Part D plans will engage in case management of potential at-risk beneficiaries, through contact with their prescribers, when such beneficiary is found to be taking a specific dosage of opioids or obtaining them from multiple prescribers and multiple pharmacies who may not know about each other. Sponsors may then limit at-risk beneficiaries’ access to coverage of controlled substances that CMS determines are “frequently abused drugs” to a selected prescribers or network pharmacies after case management with the prescribers for the safety of the enrollee.

CMS also limits the use of the special enrollment period (SEP) for dually- or other low income subsidy (LIS)-eligible beneficiaries by those LIS-eligible beneficiaries who are identified as at-risk or potentially at-risk for prescription drug abuse under such a drug management program. Finally, these provisions will codify the current Part D Opioid Drug Utilization Review (DUR) Policy and Overutilization Monitoring System (OMS) by integrating this current policy with drug management program provisions.

The purpose of these CARA drug management program provisions is to create a lock-in status for certain at-risk beneficiaries. In addition to the benefits of preventing opioid and benzodiazepine dependency in beneficiaries, CMS estimates, in 2019, a reduction of $19 million in Trust Fund expenditures because of reduced opioid scripts. This $19 million reduction modestly increases to a $20 million reduction in 2023.

Timing and method of disclosure requirements

CMS is finalizing changes to align the MA and Part D regulations in authorizing CMS to set the manner of delivery for mandatory disclosures in both the MA and Part D programs. CMS will use this authority to allow MA plans to meet the disclosure and delivery requirements for certain documents by relying on notice of electronic posting and provision of the documents in hard copy when requested, when previously the documents, such as the Evidence of Coverage (EOC), had to be provided in hard copy. CMS is also changing the timeframe for delivery of the MA and Part D EOC to the first day of the Annual Election Period (AEP), rather than 15 days prior to that date.

Allowing MA and Part D plans to provide the EOC electronically will alleviate plan burden related to printing and mailing and reduce the number of paper documents that enrollees receive from plans. In addition, changing the date by which plans must provide the EOC to enrollees will (1) allow plans more time to finalize the formatting and ensure the accuracy of the information in the EOC, and (2) separate the mailing and receipt of the EOC from the Annual Notice of Change (ANOC), which describes the important changes in a patient’s plan from one year to the next.

CMS estimates that 67 percent of the current 47.8 million beneficiaries will prefer use of the internet versus hard copies. This will result in a savings to the industry of $54.7 million each year, 2019 through 2023, due to a reduction in printing and mailing costs.

Preclusion list requirements for prescribers and providers

The Final rule rescinds the current regulatory requirement that prescribers of Part D drugs and providers of MA services and items must enroll in Medicare in order for the drug, service, or item to be covered. Instead, a Part D plan sponsor will be required to reject, or require its pharmacy benefit manager to reject, a pharmacy claim for a Part D drug if the individual who prescribed the drug is included on the “preclusion list.” Similarly, an MA service or item will not be covered if the provider that furnished the service or item is on the preclusion list.

The preclusion list will consist of certain individuals and entities that are currently revoked from the Medicare program under 42 CFR sec. 424.535 and are under an active reenrollment bar, or have engaged in behavior for which CMS could have revoked the individual or entity to the extent applicable if they had been enrolled in Medicare, and CMS determines that the underlying conduct that led, or would have led, to the revocation is detrimental to the best interests of the Medicare program.

CMS estimates that for 2019, the preclusion list provision will save providers $34.4 million. For 2020 and future years, there will be no savings. The $34.4 million in savings to providers arises because of removal of the requirement of MA providers and suppliers and Part D prescribers to enroll in Medicare as a prerequisite for furnishing health care items and services. Part C providers and suppliers will save $24.1 million in reduced costs while Part D providers will save $10.3 million in reduced costs.

Report finds flaws in proposals for premium support programs in Medicare

The Urban Institute issued a report titled “Restructuring Medicare: The False Promise of Premium Support,” in which the authors attempt to point out the potential flaws in the proposed premium support program in Medicare. The report states that the proposals attempt to model the program off of the arguably successful Medicare Advantage (MA) program, but fail to account for the features of MA that actually make it work. According to the Urban Institute, the proposals also ultimately shift the burden of the rising cost of the Medicare program to the beneficiaries, who are not in a position to shoulder the increased costs.

The proposal

Current Medicare beneficiaries can choose between traditional Medicare, where they have defined benefits covered by specified providers, or MA, where the beneficiary picks from a selection of private plans that have been approved by Medicare and charge close to traditional Medicare costs. A premium support program would allow beneficiaries a fixed-dollar contribution that they could take and apply to the insurance plan they choose in a health insurance marketplace. Beneficiaries could choose a plan that costs more than their Medicare contribution amount, but they would be responsible for paying the difference out of their own pocket. Supporters of this proposed program argue that setting a fixed cost for each beneficiary would reduce government spending and the marketplace would create competition, which would in turn drive down prices.

Burden shifting

Proponents of the premium support plan argue that without the plan, the Medicare program will run out of money, noting that the “CBO projects that between 2017 and 2047, Medicare spending will grow from 3.1 percent to 6.7 percent of GDP.” However, the report argues that the proponents of are focusing on the wrong problem. The aging-in of the baby boom generation is expected to increase Medicare enrollment by about 50 percent by 2030. By focusing on the cost of premiums and restructuring the program to force more beneficiaries to pay more out of pocket, they are shifting the burden of the increase in incoming enrollees to the beneficiaries. Medicare beneficiaries reported an annual median income of about $25,000 in 2012. “Medicare households spent nearly three times as much of their household budgets on out-of-pocket spending as non-Medicare households did” in 2012. A premium support plan could potentially increase the financial burden on those low-income beneficiaries, and force them into plans that they wouldn’t choose otherwise just to alleviate some of that financial burden.

Competitive markets

Proponents argue that forcing insurance plans to submit bids to participate similar to the way MA does would create competition and lead to lower premiums. The government contribution would then be set based on a weighted average of all of the bids for each region. However, premiums can drastically vary within a region and if premiums are higher in an area than the benchmark government contribution for the region, beneficiaries would be forced to pay the difference. The difference between earlier versions of the premium support plan and the current proposals show that the proponents have noted that there would not be an even playing field in all areas and they have attempted to come up with different ways to set the government contribution amount and increase it annually based on different factors. The MA program has an administratively set benchmark government contribution that is based on traditional Medicare spending in each area, which varies significantly compared to the bids.

Providers who bid to participate in MA are aware that there is a billing limit and they will be paid Medicare rates. The premium support plan does not take into account the impact this has on who submits bids and at what rate. In 2013, “CBO found that commercial insurance rates for inpatient hospital services were 89 percent higher than traditional Medicare rates, but Medicare Advantage plan rates for inpatient services were roughly equal to traditional Medicare’s rates.” Private insurers competing with one another in the bidding process are not likely to drop their prices down to Medicare level rates unless limits are placed on the billing of Medicare beneficiaries, similar to the limits in the MA programs. This leaves Medicare beneficiaries effectively priced out of these competing private insurance plans.

More choices and lower premiums available for MA and PDPs in CY 2018

As calendar year (CY) 2018 approaches, CMS reports that both the Medicare Advantage (MA) and the Part D prescription drug plan (PDP) programs continue to grow, currently providing care and services to more than one-third of Medicare beneficiaries. CMS also reports that the average monthly premium for an MA plan will decrease, enrollment in MA is projected to reach an all-time high, and premiums for a basic PDP will fall for the first time since 2012.

Earlier this year, CMS announced new policies in the 2018 Rate Announcement and Final Call Letter that support flexibility, efficiency, and innovative approaches that are designed to improve quality accessibility and affordability in MA and PDP programs.

MA program data

CMS data provides the following information regarding the MA program for CY 2018:

  • MA enrollment is projected to be an all-time high of 20.4 million beneficiaries, representing a 9-percent (1.7 million) increase from 18.7 million in CY 2017.
  • MA average monthly premiums will decrease by $1.91 to $30.
  • 99 percent of Medicare beneficiaries will have access to at least one MA health plan in their area.
  • More than 85 percent of Medicare beneficiaries will have access to 10 or more MA plans.
  • The average number of MA plan choices per county will increase by two plans—up to approximately 29 plan choices per county.
  • Access to popular supplemental benefits, such as dental, vision, and hearing, continues to grow in MA plans.
  • Approximately 77 percent of MA enrollees in 2017 will have the same or lower premium in 2018 if they continue in the same plan.

PDP program data

CMS projects that the average monthly premium for a basic Medicare PDP in CY 2018 will decrease by $1.20 to an estimated $33.50 per month. CMS also reports that all Medicare beneficiaries will have access to at least one stand-alone Medicare PDP.

Medicare Open Enrollment improvements

CMS is announcing several consumer-friendly improvements so that people with Medicare can make an informed choice between original fee-for-service Medicare and MA plans during open enrollment. These improvements include: (1) updating the “Medicare & You” handbook to better explain coverage options; (2) establishing a help wizard on Medicare.gov that will point to resources to help make informed health care decisions; and (3) establishing a new email communication opportunity to improve the customer service experience through important messages and reminders.