Week of 07/07/14

HRI regulatory center weekly newsletter

This week’s regulatory and legislative news:

Provider payment rules highlight Medicare priorities

Last week CMS proposed higher payments for hospital outpatient departments, lower reimbursement for home health agencies and additional money for physicians to better coordinate care for chronically ill patients. For outpatient departments, CMS proposed a $5.2 billion increase next year, which is 2.1% more than 2014 rates. Conversely, CMS called for a 0.30% reduction in home health payments, or $58 million less than 2014, to account for overall lower per-visit rates. For physicians, Medicare calculated a separate payment to reward primary care practitioners who remotely manage the medical needs of chronically ill patients.

HRI impact analysis: One common theme across all three rules is aligning payments with better coordinated and efficient care. For hospital outpatient departments, CMS kept in place a provision that creates a single comprehensive payment rate for clinical visits. For home health, the agency tightened measures that require physicians to meet with patients before they certify them for home care visits. Medicare also appears to be encouraging primary care physicians to improve how they manage chronically ill patients. The physician payment rule builds on a previous proposal that allows a separate $42 payment in addition to payment for a face-to-face visit for managing patients with diabetes, heart disease and other chronic ailments. The rule also grants more independence to the non-physician clinical staff who also see chronically ill patients. And in a nod to greater transparency, CMS said it would allow public comments regarding how much it plans to pay for certain medical services.

FDA issues guidance on compounded drugs

Nearly two years after tainted compounded drugs caused a nationwide fungal-meningitis outbreak, the FDA has issued a new draft guidance document meant to crack down on low-quality products. Compounded drugs are tailored to meet specific patient needs, such as patients with medication allergies. The new draft guidance explains how facilities should be designed to ensure the sterility of compounded drugs and prevent contamination. The agency also released a proposed rule that would amend a list of drugs that cannot be compounded because they have been withdrawn or removed from the market after being found unsafe or ineffective.

HRI impact analysis: The FDA has proposed a major reorganization of staff and duties that, if implemented, would establish a new Office of Pharmaceutical Quality. The new office would house all of the agency’s quality functions related to branded, generic and over-the-counter drugs, including reviews and inspections. A new metrics system is being considered to distinguish between high-quality manufacturers and those that are high-risk. Consumers are also concerned about drug quality — majorities in every age category surveyed by HRI said they worry about the safety and quality of the medicines they take. Those most alarmed are younger consumers. Nearly 75% of consumers between the ages of 18-24 indicated they were very or somewhat concerned about drug safety.

With consumers in mind, CMS proposes changes to quality reporting programs

Twenty-eight new quality measures, including some related to the treatment of sinus and ear infections, would be added to the Physician Quality Reporting System next year under a CMS proposed rule released last week. At the same time, the agency wants to remove another 73 measures, including those regarding back pain, sleep apnea, and pre- and post-surgical treatment. This would ultimately result in 240 reportable measures. Physician practice groups that do not fully report on these quality measures will see lower Medicare payments in 2015. The new data would be added to CMS’s Physician Compare website in 2016, which administration officials said will be revamped to become more consumer-friendly.

HRI impact analysis: The rejiggering of quality measures for a second consecutive year demonstrates CMS’s intent to use its power as a purchaser to improve clinical care in the new health economy. As a result, it’s important that both physicians and hospital providers understand the changes, especially as they are asked to make more data publicly available. Lax reporting could put a provider’s reputation at risk. Equally important, providers face financial penalties during the next several years when they fail to correctly report on Medicare’s quality measures. By 2017, some hospitals and physicians could start the payment year with about 8% of their Medicare reimbursement at risk.

Telehealth payment expansion to increase Medicare’s reach

Medicare may pay for annual wellness physicals, prolonged outpatient visits, and a number of mental health services provided online or over the telephone under a proposed rule released last week. All told, CMS wants to add seven new telehealth billing codes that would be covered by Medicare, including ones for psychotherapy and psychoanalysis. CMS, however, rejected other proposed services, such as medical imaging and dermatology exams. The agency also proposed expanding the coverage area for telehealth services to include additional rural areas closer to larger cities in order to increase the number of eligible beneficiaries located in rural areas. Medicare currently pays about $6 million a year for telehealth services, involving about 14,000 beneficiaries.

HRI impact analysis: While the number of seniors who take advantage of telehealth services is expected to grow, barriers still remain. CMS requires all telehealth services be conducted interactively, usually through a two-way audio or video real-time connection. That technology is not readily available, especially in more rural communities. In order to reach more patients, some hospitals are partnering with technology companies. As consumers look to manage healthcare costs via alternative care delivery models in the new health economy, retail businesses, remote monitoring, and mobile devices will become increasingly important.

New efforts to increase exchange numbers in 2015 open enrollment

HHS issued a proposed rule in late June that automatically re-enrolls individuals in state and federal exchanges in the next enrollment period. The auto-enrollment rule is part of a larger CMS effort to reduce disruptions to coverage for the roughly 8 million individuals already signed up through the exchanges. The next open enrollment period is scheduled to occur between November 15, 2014 and February 15, 2015. According to a recent Health Affairs study, this date range presents a challenge for many lower-income individuals who are financially limited during the holiday season. The study suggests that shifting the open enrollment period for the exchanges to February 15-April 15 — when individuals receive tax refunds and credits — could increase enrollment numbers.

HRI impact analysis: While auto-enrollment will help maintain the number of insured individuals currently enrolled through the exchanges, it will also help capture market share for insurers that participated in the first year of enrollment. Several major commercial insurers plan to compete on the exchanges for 2015, and new nonprofit insurers created under the ACA, known as healthcare CO-OPs, are proposing competitive premiums to attract the newly insured. View HRI’s state-by-state map to see preliminary 2015 individual premium rate filings, which on average increased by 7.22% in the states reporting data.

Upcoming events & deadlines

  • August 12 – Deadline to submit ideas to the Senate Finance Committee on how to increase the transparency of healthcare data
  • August 15 – PCORI matchmaking app challenge application deadline

Quote of the week

“We don’t want to have a situation where your brain is in one HMO, your teeth are in a second HMO, and your eyes are in a third HMO,” said Florida Medicaid director Justin Senior. Florida became the first state to offer a Medicaid plan exclusively for people with serious mental illnesses in order to coordinate both physical and mental healthcare for those enrolled in Medicaid.

In the news

On Wednesday, the White House released its 2014 National Drug Control Strategy, which calls for $25.5 billion to help pay for prevention, treatment, and law enforcement efforts targeting drug abuse. The report follows a new CDC report showing the variation in prescriptions for painkillers across the United States. It highlighted the impact of federal and state policies on reducing drug abuse.

Factually correct

90% – The percentage of businesses that are “closely held,” or have more than half the value of its stock owned by five or fewer individuals. However, close corporations account for only 52% of all private employment according to a 2002 study from New York University. The Supreme Court ruled 5-4 that closely held corporations don’t have to offer contraceptive benefits under ACA mandated health insurance coverage.

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