Articles Posted in Medicaid

On September 2, 2020, the Centers for Medicare & Medicaid Services (CMS) finalized fiscal year (FY) 2021 policies in the Inpatient Prospective Payment System (IPPS) for acute care and long-term care hospitals. The rule safeguards access to critical diagnostic technology and medical treatments through increasing technological innovation in the medical industry, easing industry competition, and updating hospital payment policies. IPPS is the Medicare payment system for acute care hospitals. Payments are issued per inpatient or per patient discharge.  Discharge cases are categorized into diagnosis related groups (DRGs) based on similar diagnoses and services provided during the inpatient process. CMS updates the IPPS regulations each year, which allows inpatient hospitals to address quality improvement efforts and maximize cost effectiveness. The updated IPPS final rule takes effect on October 1, 2020 with two very noteworthy changes.

The first important change to the final rule is the switch to a market-based method for weight data collection for calculating Medicare Severity Diagnosis Related Groups (MS-DRGs). Currently, payments for cases under IPPS are calculated by multiplying a hospital’s standardized cost per case, adjusted by geographic location, by the relative weight for the MS-DRG assigned to the case. This cost-based methodology mainly uses hospital charges based on claims and hospital report data. However, recently CMS has acted to reduce Medicare’s use of hospital charge data, due to the thought that gross rates are an inaccurate representation of market costs. In the final rule, MS-DRG weights will instead be based on median payer specific negotiated charges for Medicare Advantage (MA) organizations, collected through Medicare cost reports. This new methodology will be fully implemented by FY 2024. CMS predicts that since hospitals are already obligated to publicly report payer-specific negotiated charges, that calculating and reporting the MA negotiated charge by MS-DRG will be less taxing on hospitals compared to the current method of weight data collection.

The second important change to the final rule is that it encourages the development of medical technology through the creation of several new alternative pathways and payment groups. Under this rule, 13 new technologies that applied for new FY 2021 add-on payments were approved. CMS will continue new technology add-on payments for a portion of the technologies that currently receive the add on payment. Thus, 24 technologies in total will be eligible to receive add-on payments for FY 2021. In addition, this payment expansion includes a new MS-DRG for Chimeric Antigen Receptor (CAR) T-cell Therapy, which will allow for more predictable compensation as well as accurate and efficient billing for hospitals paid through the IPPS when offering these immunotherapy procedures.

On September 1, 2020, the Department of Health and Human Services (“HHS”) announced that Assisted Living Facilities (“ALFs”) are now eligible to apply for payments under the Provider Relief Fund (“PRF”). ALFs have until September 13, 2020 to begin the application process.

The PRF is a multi-billion-dollar fund created by Congress through the CARES Act to provide financial relief to healthcare providers during the COVID-19 pandemic. The PRF is administered by HHS and the Health Resource Services Administration (“HRSA”). HHS has subdivided the PRF into various allocations and distributions. Expanded eligibility for ALFs falls under the Phase 2 General Distribution, which is meant to cover providers who did not receive payments under the initial Phase 1 General Distribution.

Some ALFs who bill Medicare or Medicaid were eligible for payments under prior PRF distributions. ALFs who do not bill Medicare or Medicaid are now eligible to apply for a payment if: 1) they filed a federal tax return for fiscal years 2017, 2018, or 2019 (or are exempt from filing a return), 2) provided patient care after January 31, 2020, 3) have not permanently ceased providing patient care,  4) are not otherwise excluded from federal health care programs, and 5) agrees to the terms and conditions of the payment.

The Coronavirus is causing many changes and uncertainties about how our healthcare is treated. With the utilization of 1135 waivers, states can assist enrollees in Social Security Act programs in obtaining sufficient health care items and services. Under the Stafford Act or National Emergencies Act, the President has the authority to declare a national disaster or emergency. The Secretary of the Department of Health and Human Services (“HHS”) can then temporarily waive or modify certain Medicare, Medicaid, and Children’s Health Insurance Program (“CHIP”) requirements. Under these waivers, providers are expected to act in good faith, can be reimbursed for, and be exempted from sanctions—absent any determination of fraud and abuse.

1135 waivers last up until the termination of the emergency period, or 60 days from the date the waiver was approved, whichever comes first. The Secretary may extend the waiver for additional periods of up to 60 days if it is deemed necessary. While the 1135 waivers only apply to Federal program requirements, states should also consider altering their licensure or conditions or participation requirements.

On March 16, 2020, Florida was the first state to have an 1135 waiver approved by the Centers for Medicare and Medicaid Services (“CMS”). Florida addressed concerns of federal requirements hindering the state’s ability to continue to deliver proper health care. The 1135 waiver changed five main things. First, Florida is temporarily allowed to enroll providers who are not currently enrolled with another State Medicaid Agency (“SMA”) or Medicare if the state meets some minimum requirements. Second, CMS is temporarily waiving all pre-approval requirements. Third, pre-admission screening and annual resident reviews (“PASRR”) for both Level 1 and Level 2 can be waived for the next 30 days. Fourth, facilities are temporarily allowed to be fully reimbursed for services rendered during an emergency evacuation to an unlicensed facility. And lastly, the fifth waiver is the temporary delay of scheduling Medicaid Fair Hearings and the issuance of Fair Hearing Decisions during the emergency period.

In order to deliver telemedicine services, providers must have a license issued to them by the state in which the patient receiving the telemedicine resides. Thus, providers offering telemedicine may have to get licensed in multiple states depending on where their patients live. Obtaining multiple licenses to practice interstate telemedicine is timely and costly, which may deter providers from using telemedicine; this is an issue for rural and underserved areas who rely on telemedicine for access to healthcare.

The TELE-MED Act of 2015 was intended to reduce licensing barriers for interstate telemedicine by making Medicare coverage and reimbursement available for interstate telemedicine services. However, the Act failed to get congressional approval when it was introduced three years ago. Its purpose was to amend title XVIII of the Social Security Act so that Medicare participating providers could provide interstate telemedicine services to Medicare beneficiaries without having to get licensed in multiple states. This would have significantly aided Medicare beneficiaries who need telemedicine from providers out of state.

Though the TELE-MED Act did not pass, the Interstate Medical Licensure Compact (IMLC) may still reduce the burden for providers wanting to use interstate telemedicine. Acknowledging the burden of applying to for a license in other states, especially when providers have patients across multiple states, the IMLC has created an expedited pathway for interstate licensure. The IMLC formed a Commission made up of two representatives from each adopting state, and the Commission reviews the applicants and determines whether they should be issued a license or not. The IMLC is an agreement with 24 states, 1 territory, and the 31 Medical and Osteopathic Boards in those states and territory. IMLC is streamlining the licensing process, but it is still expensive and does not solve the problem that physicians using telemedicine must be licensed wherever their patients are located.

The 340B drug discount program was originally created to provide affordable and comprehensive drug services to indigent patients. Manufacturers agree to provide prescription drugs to covered entities at significantly reduced prices, who can then offer the discounted prescription drugs to eligible patients. Covered entities include: HRSA-supported health centers, Ryan White clinics, State AIDS Drug Assistance programs, Medicare/Medicaid Disproportionate Share Hospitals, Children’s Hospitals, and other safety net providers.

The Department of Health and Human Service (HHS) Secretary Alex Azar is concerned about the 340B program; he suggests that there has been abuse of the program by covered entities.  Azar stated that “[t]he current nature of 340B is such that it is quite possible for the program’s benefits to be diverted to unintended purposes, unrelated to supporting care for low-income patients.” In fact, many 340B hospitals are able to receive drug discounts for all of their patients, even though there are only a small amount of uninsured and underserved patients at the hospital. A report by the OIG found that a majority of 340B entities do not even offer the reduced prices to uninsured patients, allowing them to profit off the program.

In a meeting with lawmakers, Azar proposed to cut the discount to 20% of the list price, which is significantly lower than the typical 40-60% discount. This effort by HHS coincides with the Trump administration’s goal to lower prescription drug prices.