Off-campus outpatient department payment proposal meets industry criticism

CMS’ proposal to revise the outpatient prospective payment system’s (OPPS) method for reimbursing hospitals and physicians for services performed at off-campus locations has received harsh critiques from the industry. Hospitals are concerned that as written, the Proposed rule would require them to enter into financial arrangements with physicians that may otherwise violate fraud and abuse laws. Yet without making such arrangements, hospitals would be required to pay for these off-campus facilities but receive no reimbursement for services.

Proposed rule

The Proposed rule (81 FR 45603) in question is a lengthy one that concerns several programs and entities. One of the many things proposed is implementation of section 603 of the Bipartisan Budget Act, which mandated that certain services furnished off-campus will not be considered outpatient department (OPD) services, but paid under the applicable Part B system. For new off-campus departments that billed for Medicare outpatient services under the OPPS after November 2, 2015, the physician fee schedule will be applied in 2017 for most services.

Hospitals often have multiple departments and facilities spread across an area, and these must meet certain criteria to be considered provider-based. An off-campus outpatient department must be located within a 35 mile radius of the hospital, be held out to the public as part of the hospital, operate its finances fully integrated with the hospital, and provide clinical services integrated with the main hospital.

Objections

The American Hospital Association recently published a letter stating its objection, accompanied by a legal memorandum. Calling the policies “short-sighted and unworkable,” the letter states that hospitals will not be provided reimbursement for some Medicare services under the site-neutral policies. The AHA reasons that off-campus departments that have existing financial arrangements with physicians may run afoul of the Stark law (42 U.S.C. §1395nn) and the Anti-kickback Statute (AKS) (42 U.S.C. § 1320a-7b). The AHA believes that CMS must delay site-neutral policy implementation for at least one year in order to address the significant compliance risks.

The accompanying legal memorandum provided by Hogan Lowells dives deeper into the policy implications. The memorandum finds that the new policy may result in physicians receiving payment for expenses to own and operate the facility, even though it is an off-campus department of a hospital. Hospitals are prohibited from providing free goods and services to referring physicians under the AKS and Stark law. Even furnishing items for a physician to use in his practice may be implicated under these laws, if the items reduce a physician’s cost of doing business and are offered with intent to induce referrals. Under the new policy, physicians would receive a benefit of reimbursement for services when they paid nothing for the location in which the services were provided.

Other comments

Lawrence Vernaglia, Foley & Lardner health attorney, offered the opinion that implementing these new payments would impose unreasonable difficulties on outpatient departments that wanted to add new services. He suggested that CMS alter the requirement that grandfathered facilities remain exactly the same as before the rule was implemented and allow departments to make necessary changes. In addition, because site-neutral payments are unlikely, in his opinion, to reduce outpatient department costs, hospitals may decide to close off-campus facilities which could limit access.

America’s Essential Hospitals (AEH) focused on these access issues in its comments, stating that CMS policies “will perpetuate health care deserts” by limiting flexibility and withholding payments to outpatient departments. It emphasized that establishing and sustaining new off-campus facilities is a challenging process when serving vulnerable patients, and that the policy will make new facilities “economically unsustainable.”

These access comments should have been of little surprise to CMS, as on May 19, 2016, a very large group of senators signed a letter addressed to Acting Administrator Andy Slavitt requesting flexibility in applying the new policies. The senators emphasized the necessity of providing hospitals a predictable landscape while providing them the leeway needed to ensure access. The senators specifically asked for flexibility for services provided at dedicated emergency departments (DEDs) as well as off-campus departments that sought to relocate, rebuild, expand, or change ownership in order to meet a community’s needs.

Highlight on Louisiana: State loosens telemedicine requirements for physicians

Effective June 17, 2016, physicians engaging in the practice of telemedicine in the state of Louisiana need not have a physical practice location in the state, nor are they required to enter into an arrangement with a physician who does have a Louisiana practice location to provide for referrals and follow-up care. The new telemedicine law, which also allows physicians to utilize interactive audio without video in certain circumstances, was proposed in reaction to regulations issued by the State Board of Medicine in 2015, which created the physical practice requirement.

In-state practice location

In November 2014, the American Telemedicine Association (ATA) issued comments to the Board, stating that its then-proposal to require physicians to maintain a physical practice location or enter into arrangements with in-state physicians “would be the most anti-telemedicine in the nation, especially for patients needing medical experts outside the borders of Louisiana or in an [sic] natural disaster,” and went on to opine that the proposal “reflect[ed] more of a concern of protecting economic markets rather than having anything to do with providing health services to the residents of Louisiana.”

The new law eliminates the physical practice requirement but retains the Board rules stating that physicians need not conduct an in-person physical examination or patient history prior to providing telemedicine services as long as they hold unrestricted licenses to practice medicine in the state and have access to patient records with consent.  However, it adds requirements for doctors to create a medical record for each patient and make it available to the Board upon request and, when necessary, to provide a referral to an in-state physician or otherwise arrange for in-state follow-up care.

Audio communications

The 2015 Board rules also required physicians to provide telemedicine services via simultaneous two-way video and audio communications. The new law, however, allows doctors to utilize interactive audio communications without video communication, provided that they first access and review a patient’s records and determine that they can meet the same standard of care as if they were providing face-to-face services.

Controlled substances

The new law did not affect existing Board rules prohibiting physicians from prescribing controlled substances via telemedicine services unless the physician has had at least one in-person, in-state medical visit at a practice location within the past year, the prescription is entered for a legitimate medical purpose, it conforms with the in-person standard of care, and is otherwise permitted by state and federal laws and regulations.

 

As naloxone prominence increase in opioid fight, so does price

The price of naloxone, a drug used to reverse the effects of an opioid overdose, has skyrocketed in the past few years. Despite complaints from lawmakers and national advocacy groups such as Harm Reduction Coalition, the price increases have come at a time when public health officials cite the record number of overdose deaths – more than 27,000 in the U.S. in 2014 – with almost 19,000 from prescription opioids and over 10,000 heroin-related, 16 and 28 percent increases from the previous year.

President Obama recently signed a law aimed at addressing the growing opioid crisis in the U.S. and naloxone is at the forefront of the conversation, as it is often the drug of choice to reverse the effects of opioids on the brain and can limit or stops a heroin or prescription opioid overdose. The Comprehensive Addiction and Recovery Act of 2016 increases the availability of naloxone, strengthens prescription drug monitoring programs (PDMPs) by assisting states with monitoring and tracking prescription drug diversion, and expands prevention and educational efforts with teens and other adult populations.

The most common formulation of naloxone used by police departments, hospitals, and addiction advocacy organizations is made by Amphastar Pharmaceuticals, which raised concerns after it increased the list price of 10 injectable naloxone from $120 to $330 in October 2014. In the last decade, Hospira’s injectable dose has gone from 92 cents in 2005 to more than $15 in 2014. Meanwhile, Kaleo Pharma raised the price of its naloxone product, Evzio, several times in since 2015. In November 2015, the price went up to $375, followed by an increase to $1,875 in February 2016; the single-dose auto-injector price is now at $2,250.

According to Truven Health Analytics, the rise in price has been partly driven from the lack of competition. The price hikes jumped in frequency and volume in 2008 after several manufacturers stopped producing the drug, leaving Hospira and Amphastar as the sole manufacturers of naloxone. Mylan and Kaleo only introduced naloxone products in 2014, but only Mylan, Amphastar, and Hospira make the cheaper, injectable versions. Kaleo makes the auto-injector.

The demand for naloxone is not likely to decrease in the near future, as Congress is considering requiring that physicians co-prescribe the drug with every opioid prescription.

Premium-supported Medicare proposal spawns many questions, no solid answers

Medicare currently makes payments based on specific services, but policy discussion is swirling about changing the program to a premium support system that operates on capitation payments, or payments per person. The Kaiser Family Foundation (KFF) offered some answers to common questions that are now swirling after Rep. Paul Ryan (R-Wis) released a Republican health reform proposal that includes partially privatizing Medicare (see Ryan proposes ‘A Better Way’ to repeal Obamacare, Health Reform WK-EDGE, June 29, 2016). The KFF warned that out-of-pocket costs for beneficiaries could either rise or fall under the proposed plan, depending on various factors.

How would it work?

The new system would involve a federal payment made for each beneficiary toward a health plan purchase, either a private plan (like under Medicare Advantage), or traditional Medicare. Beneficiaries would be able to choose their plans. The KFF emphasized that that various premium support proposals provided over the last few years have key differences in how policies would work, including benefit specificity, health insurer rules, and payment setting.

The price tag

A premium payment system’s particular design will determine the amount of premiums and out-of-pocket payments. Premiums for covered services would vary by geography and plan. The Congressional Budget Office (CBO) found that total cost to beneficiaries would decrease if the federal payments were tied to the average plan bid but would increase if tied to the second lowest plan bid. A general decrease, however, does not mean that every beneficiary’s payments will go down. Most beneficiaries who remain in traditional Medicare would pay more.

One of the primary aims of such a system is to reduce federal spending. If plan competition increases and results in decreased premiums, and beneficiaries are incentivized to choose the most cost-effective health plan, long-term federal spending on the program could decrease. Like beneficiary costs, federal government costs depend on plan structure.

Effects on beneficiaries and providers

The preservation of particular benefits is currently unknown, as some proposals differ. Currently, Medicare Advantage plans must offer at least the amount of benefits a beneficiary would receive under traditional Medicare, but premium support proposals have not clearly established this requirement. Some proposals offer subsidies for low-income beneficiaries, but these may be insufficient to allow such individuals to select the plan they want. They may also need to switch plans frequently to avoid premium hikes. KFF believes that a premium support plan may erode traditional Medicare enrollment so much that providers may have fewer incentives to enroll in accountable care organizations and other payment reform efforts, and subsidized providers like teaching hospitals may not receive the financial support to which they are accustomed.