Articles Posted in Compliance

The Centers for Medicare & Medicaid Services (CMS) recently issued a proposed rule that would require disclosure of private equity (PE) or real estate investment trusts (REITs) ownership, managerial, and other disclosable information for Medicare skilled nursing facilities (SNFs). The proposed rule also includes recommendations for comparable requirements for Medicaid nursing facilities (NFs) at the state level. If finalized, the proposed rule would likely increase the complexity of transactions involving PE or REIT ownership of SNFs and increase the reporting burden of PE or REITs with existing ownership interest in these facilities.

The timing of this proposed rule, according to CMS, is purposefully aligned with the Biden Administration’s recent initiative to improve the safety, quality, and accountability of nursing homes. The proposed rule also complements other recent CMS efforts intended to strengthen provider enrollment rules to “stop fraud before it happens” and stop playing “pay and chase” with individuals and organizations that the agency views as posing an undue risk of fraud, waste, or abuse to the Medicare and Medicaid programs. CMS stated that this proposed rule is necessary to obtain important data about the owners and operators of Medicare SNFs and Medicaid NFs, enabling CMS and states to better monitor the ownership and management of these providers. Given allegations of quality issues and differences in outcomes of these facilities with certain types of owners, CMS views this as an especially critical consideration.

If finalized, the proposed rule would require disclosure of the following information for all Medicare SNFs and Medicaid NFs:

As part of the Inflation Reduction Act (IRA) of 2022, the Centers for Medicare & Medicaid Services (CMS) is required to establish the Medicare Drug Price Negotiation Program (Negotiation Program) to negotiate maximum fair prices (MFPs) for certain high expenditure, single source drugs and biologicals. In accordance with the IRA’s requirements, CMS recently issued an initial guidance memorandum for implementation of the Negotiation Program for initial price applicability year 2026, as well as solicitation of comments.

The initial guidance memorandum describes how CMS intends to implement the Negotiation Program for initial price applicability year 2026 (January 1, 2026 to December 31, 2026), and specifies the requirements that will be applicable to manufacturers of Medicare Part D drugs that are selected for negotiation and the procedures that may be applicable to manufacturers of Medicare Part D drugs, Medicare Part D plans (both Prescription Drug Plans (PDPs) and Medicare Advantage Drug Plans (MA-PDs)), and providers and suppliers (including retail pharmacies) that furnish Medicare Part D drugs.

Additionally, the IRA creates several new sections under the Social Security Act (Act) to administer and govern the Negotiation Program. Specifically, in accordance with the IRA and the newly created provisions under the Act, CMS’ initial guidance provides that with respect to each initial price applicability year, CMS shall:

In January 2023, the U.S. Department of Health and Human Services (HHS) through the Centers for Medicare & Medicaid Services (CMS) issued a final rule implementing policies for the Medicare Advantage (MA) Risk Adjustment Data Validation (RADV) program. The RADV program is CMS’s primary audit and oversight tool of MA program payments. Under the RADV program, CMS identifies improper risk adjustment payments made to Medicare Advantage Organizations (MAOs) in situations where medical diagnoses submitted for payment allegedly were not supported in the beneficiary’s medical record.  The RADV final rule is oriented to ensure that Medicare recipients have access to the benefits and services they need, including under MA plans, while protecting the fiscal administration of the Medicare program by aligning CMS’s oversight of traditional Medicare and MA programs.

Under the final rule, CMS will not extrapolate audit findings for payment years 2011 through 2017, and will collect only non-extrapolated overpayments for those plan years. This is a notable departure from previous rulemaking, which proposed to apply extrapolation beginning in payment year 2011. Audit extrapolations will begin with the plan year 2018 RADV audit using any extrapolation technique that is statistically valid. CMS has indicated that the audits will center on plans identified as highest risk for improper payments. CMS also stated its intention that, while they are not required to do so, CMS will continue to disclose their extrapolation methodology to MAOs in order to provide MAOs with information sufficient to understand the means by which CMS extrapolated the RADV payment error.

The final rule also solidifies the proposed policy that CMS will not apply a fee for service (FFS) adjuster in RADV audits. The final rule explains that the requirement for actuarial evidence in MA payments applies to how CMS risk-adjusts the payments it makes to MAOs, and not to the obligation to return overpayments for unsupported diagnosis codes, including overpayments identified during a RADV audit. Additionally, CMS has expressed that it does not believe that it is reasonable to interpret the relevant provisions in the Social Security Act as requiring a reduction in payments to MAOs by a statutorily set minimum adjustment in the coding pattern adjustment, while at the same time prohibiting CMS from paying at those reduced rates by mandating a FFS adjuster for RADV audits. In light of these recently finalized policies, MAOs should take steps to ensure compliance with the Medicare program in order to be fully prepared for increased audits of MA plans.