Kusserow on Compliance: August update on OIG Work Plan—four new projects added

The OIG Work Plans set forth various audits and evaluations that are underway or planned during the fiscal year and beyond. In June this year, the OIG announced the adjusting of its Work Plan on a monthly basis, rather than semi-annually as has been done previously to ensure that it more closely align with the work planning process. The updates include the addition of newly initiated Work Plan items and the removal of completed items. In conducting its work, the OIG assesses relative risks in HHS programs and operations to identify those areas most in need of attention, including responding mandates set forth in laws, regulations, or other directives; and requests by Congress, HHS management, or the Office of Management and Budget.  The following are four new work plan projects added for this year:

  1. Review of the Patient Safety Organization Program (PSO) [OEI-01-17-00420]. The PSO program established federally to work with health care providers to improve the safety and quality of patient care; and created the first and only comprehensive, nationwide patient safety reporting and learning system in the United States. The OIG plans to determine the reach and value of the PSO program among hospitals and will also oversight and challenges of the PSO program.
  2. Duplicate Drug Claims for Hospice Beneficiaries [W-00-17-35802; A-06-17-xxxxx]. Hospice providers are required to render all services necessary for the palliation and management of a beneficiary’s terminal illness and related conditions, including prescription drugs. Medicare Part A pays providers a daily per diem amount for each individual who elects hospice coverage, and part of the per diem rate is designed to cover the cost of drugs related to the terminal illness. The OIG auditors plan to determine whether Part D continues to pay for prescription drugs that should have been covered under the per diem payments made to hospice organizations, following up on previous work performed in this area related to Part D drug claims for hospice benefits under Part A.
  3. Medicare Part B Payments for Psychotherapy Services [W-00-17-35801; A-09-17-xxxxx]. Medicare Part B covers the treatment of mental illness and behavioral disturbances in which a physician or other qualified health care professional establishes professional contact with a patient.  In calendar year 2016, Part B allowed approximately $1.2 billion for these psychotherapy services. The OIG will review Part B payments for psychotherapy services to determine whether they were allowable in accord with Medicare documentation requirements.
  4. Ventilation Devices: Reasonableness of Medicare Payments Compared to Amounts Paid in the Open Market [W-00-17-35803; A-05-xx-xxxxx]. Medicare reimbursement for ventilation devices has risen from $51 million in 2011 to $72 million in 2015. OIG auditors plan to determine the reasonableness of the fee schedule prices that Medicare and beneficiaries pay for ventilation devices compared to prices on the open market to identify potential wasteful spending in the Medicare program.

 

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2017 Strategic Management Services, LLC. Published with permission.

CMS grants New Hampshire Medicaid funding compliance extension

CMS has clarified that New Hampshire’s Medicaid expansion may end next year, but the current program can continue until the end of 2018. CMS stated that New Hampshire’s use of voluntary donations from health care providers and hospitals in the New Hampshire Health Protection Fund fails to comply with the federal requirements. CMS raised the possibility that federal funds may be withheld which would have resulted in a termination of the program.

The Medicaid statute in Section 1903(w) of the Soc. Sec. Act and implementing regulations at 42 CFR Sec. 433.54 and 433.66 establish a prohibition on provider-related donations, except in very limited circumstances. In a letter to New Hampshire officials, CMS indicated that there is a relationship between the donations and Medicaid payments, because Medicaid expansion is conditioned on the receipt of donations as articulated in New Hampshire legislation. The state’s use of voluntary donations from hospitals to supplement federal Medicaid funding violates federal law. The non-federal share financing of the New Hampshire Health Protection Program or Medicaid expansion through the use of provider-related donations to pay for Medicaid service-related costs violates the requirement that a bona fide provider-relation is a donation that has no direct or indirect relationship to Medicaid payments.

The 50,000 New Hampshire residents participating in the Medicaid expansion will not see any change in their coverage through the current re-authorization which continues until the end of 2018.New Hampshire’s next legislative session will need to address compliance with the federal law for the 2019 budget to bring the state’s non-federal share financing into compliance with the existing federal statute and regulations. Otherwise, Medicaid expansion in the state will lose federal funding. Governor Chris Sununu (R) stated that stripping coverage from Medicaid enrollees would have been “grossly unfair,” and will use the transition period to consider future changes.

2018 MA and PDP premium, bid amount, related information released

Important 2018 Medicare Part D prescription drug plan (PDP) and Part C Medicare Advantage (MA) information for MA organizations and PDP sponsors has been announced by CMS. The information includes the average basic premium for a PDP, the Part D national average monthly bid amount, the Part D base beneficiary premium, the income-related monthly adjustment amount (IRMAA) for enrollees in PDPs who have incomes above certain threshold amounts, the Part D regional low-income premium subsidy amounts, the MA regional preferred provider organization (PPO) benchmarks, and the MA employer group waiver plan (EGWP) regional payment rates.

Average basic PDP premium

The average premium for 2018 is based on bids submitted by drug plans for basic drug coverage for the 2018 benefit year and calculated by the independent CMS Office of the Actuary. The average basic premium for a PDP in 2018 is projected to decline to an estimated $33.50 per month. This represents a decrease of approximately $1.20 below the actual average premium of $34.70 in 2017. The decline comes despite the fact that spending for the Part D program continues to increase faster than spending for other parts of Medicare, largely driven by spending on high-cost specialty drugs.

Part D national average monthly bid amount

CMS computes the national average monthly bid amount from the applicable Part D plan bid submissions in order to calculate the base beneficiary premium. The national average monthly bid amount is a weighted average of the standardized bid amounts for each stand-alone PDP and MA prescription drug plan (MA-PD). The calculation does not include bids submitted by Medicare medical saving account plans, MA private fee-for-service plans, specialized MA plans for special needs individuals, Program of All-Inclusive Care of the Elderly (PACE) programs, any “fallback” PDPs, and plans established through reasonable cost reimbursement contracts. The reference month for the 2018 calculation was June 2017. The national average monthly bid amount for 2018 is $57.93.

Part D base beneficiary premium

The base beneficiary premium is equal to the product of the beneficiary premium percentage and the national average monthly bid amount. Part D beneficiary premiums are calculated as the base beneficiary premium adjusted by the following factors: (1) the difference between the plan’s standardized bid amount and the national average monthly bid amount; (2) an increase for any supplemental premium; (3) an increase for any late enrollment penalty; (4) a decrease for MA-PDs that apply MA A/B rebates to buy down the Part D premium; and (5) elimination or decrease with the application of the low-income premium subsidy. The Part D base beneficiary premium for 2018 is $35.02. In practice, actual premiums vary significantly from one Part D plan to another and seldom equal the base beneficiary premium.

Income-related monthly adjustment amount (IRMAA)

If a beneficiary’s “modified adjusted gross income” is greater than the specified threshold amounts ($85,000 in 2018 for a beneficiary filing an individual income tax return or married and filing a separate return, and $170,000 for a beneficiary filing a joint tax return), then the beneficiary is responsible for a larger portion of the total cost of Part D benefit coverage. Therefore, in addition to the normal Part D premium paid to a plan, such beneficiaries must pay an IRMAA to the standard base beneficiary premium of $35.02 for 2018. Beneficiaries do not pay the IRMAA to the Part D plan; instead, IRMAAs are collected by the federal government.

Part D regional low-income premium subsidy amounts

Full low-income subsidy (LIS) individuals are entitled to a premium subsidy equal to 100 percent of the premium subsidy amount. A Part D plan’s premium subsidy amount is the lesser of the plan’s premium for basic coverage or the regional low-income premium subsidy amount (LIPSA). The 2018 regional LIPSAs are available through the CMS website.

MA regional PPO benchmarks

The standardized PPO benchmark for each MA region is a blend of: (1) a statutory component consisting of the weighted average of the county capitation rates across the region for each appropriate level of star rating; and (2) a competitive, or plan-bid, component consisting of the weighted average of all of the standardized A/B bids for regional MA PPO plans in the region. For 2018, the national weights applied to the statutory and plan-bid components are 66.5 percent and 33.5 percent, respectively.

Beginning in 2017, these benchmarks reflect the average bid component of the regional benchmark excluding EGWPs. The statutory and plan-bid components of the MA regional standardized benchmarks for 19 of the 26 MA regions are available from CMS. In the remaining seven MA regions, there are no regional MA plans.

MA regional EGWP payment rates

For detailed descriptions of the payment policy finalized for 2018 MA regional EGWP payment rates see the 2018 Advance Notice and Rate Announcement. The payment rates for Regional EGWPs are in the file Regional Rates and Benchmarks 2018 which can be accessed on the CMS website.

Kusserow on Compliance: Trustees forecast Medicare hospital trust fund solvent until 2029

The hospital trust fund forecast for Medicare’s hospital insurance trust fund found improvement in the past year due to health costs rising more slowly than expected and predictions that enrollees will use hospital services less often. The trust fund would last through 2029, one year later than what was projected last year. As in past years, the Trustees have determined that the fund is not adequately financed over the next 10 years. They projected modest surpluses to continue in 2017 through 2022, with a return to deficits thereafter until the trust fund becomes depleted in 2029. HHS Secretary Tom Price, one of four Medicare trustees, also said the hospital trust fund forecast was secure enough that it would not trigger a Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) provision to make automatic cuts to the program. Those cuts are required by the ACA when spending is expected to exceed certain benchmarks. Despite the slightly improved outlook, the trustees warned that the aging of the baby boom population and rising health care costs will cause Medicare expenses to increase and deplete the trust funds.

The report noted that in 2016, Medicare covered 56.8 million people. About one third of these beneficiaries have chosen to enroll in Part C private health plans that contract with Medicare to provide Part A and Part B health services. Total expenditures in 2016 were $678.7 billion, and total income was $710.2 billion, which consisted of $700.4 billion in non-interest income and $9.8 billion in interest earnings. Assets held in special issue U.S. Treasury securities increased by $31.5 billion to $294.7 billion


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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2017 Strategic Management Services, LLC. Published with permission.