Articles Posted in Medicare

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On November 16, 2020, the Centers for Medicare & Medicaid Services (CMS) released its 2020 Estimated Improper Payment Rates. Under the 2019 Payment Integrity Act, CMS is required to review Medicare Fee-For-Service (FFS), Medicare Part C, Medicare Part D, Medicaid, and the Children’s Health Insurance Program (CHIP) and estimate the amount of improper payments made under each program.

The reported improper payment data for CMS FY 2020 represents claims submitted July 1, 2018 through June 30, 2019. Due the COVID-19 pandemic, CMS temporarily halted all data requests to providers and state agencies regarding incorrect payments from March to August 2020. To compile the report, CMS adjusted calculation methods for reporting improper payment rates for the 2020 Agency Financial Report (AFR), using data already available at the time of the COVID-19 pandemic or data voluntarily provided. The calculated rates still meet national precision requirements.

The FY 2020 improper payment rate for Medicare FFS, which includes Part A and Part B, was estimated to be 6.27% or $25.74 billion. This represents a notable decrease from FY 2019, for which the improper payment rate was estimated as 7.25%, or $28.91 billion. The result of this decrease is likely due to reductions in the improper payment estimates for home health and skilled nursing facilities, which saw a $5.90 billion and $1 billion decrease, respectively. These decreases are likely due to several policy clarifications by CMS.

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On November 4, 2020, the Department of Health and Human Services (“HHS”) proposed a new rule that would require HHS to review many of its regulations every ten years. HHS proposed the new rule pursuant to the Regulatory Flexibility Act (“RFA”), which was enacted under President Carter in 1980. Under the proposed rule, every ten years, HHS would review a regulation to determine whether it is still needed, whether it is having the appropriate impacts, and whether it ought to be revised or rescinded. Regulations that are not timely reviewed would expire.

Nearly all regulations would undergo a two-step review. HHS would first determine whether the RFA applies to a regulation by assessing whether they have a significant economic impact on a substantial number of small entities. If the RFA applies, HHS will then conduct a more detailed review of the regulation and consider: (1) the continued need for the rule, (2) complaints about it, (3) the rule’s complexity, (4) the extent to which it duplicates or conflicts with other rules, and (5) whether technological, economic, and legal changes favor amending or rescinding the rule. Public comments will be accepted as part of this review process.

The following regulations will not be subject to this review: regulations that are jointly issued with other agencies, regulations that legally cannot be rescinded, and regulations issued with respect to a military or foreign affairs function or addressed solely to internal management or personnel matters. Regulations that affect the regulations of other agencies will be reviewed in conjunction with those agencies.

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The Department of Health and Human Services (HHS) announced on Wednesday, October 28, 2020, that an additional $333 million in performance payments will be granted to nursing homes that reduced their COVID-19 death and infection rates during August and September of the COVID-19 pandemic. HHS will allocate these payments to more than 10,000 nursing homes that successfully addressed the COVID-19 pandemic and continue to incentivize infection control, training, safety improvements, and protection of the vulnerable elderly population.

These payments represent phase one of the Nursing Home Quality Incentive Program, a five phase, $2 billion incentive program, announced by HHS and the Trump Administration in September 2020. For a nursing home to qualify for payments under the incentive program, current certification as a nursing home or skilled nursing facility (SNF) is required, and the facility must receive reimbursement from CMS. Nursing facilities are also required to submit a minimum of one of three types of data sources to check eligibility and collect important provider information. These data sources include: Certification and Survey Provider Enhanced Reports (CASPER), Nursing Home Compare (NHC), and Provider of Services (POS).

The incentive program will be divided into five phases, with nursing homes receiving September payments early in November and an additional four opportunities to receive incentive payments in the following months. The five phases of the program correspond with five successive monthly periods in which nursing homes can receive incentive payments for reaching certain goals. Specific goals will vary based on local COVID-19 statistics.

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In late October 2020, the Department of Health and Human Services (“HHS”) released guidance on use of Provider Relief Fund (“PRF”) payments to cover costs associated with a potential COVID-19 vaccine. Also, in late October, HHS Office of the Inspector General (“OIG”) announced a review of the Health Resource and Services Administration’s (“HRSA”) administration of the PRF. The PRF is a $175 billion fund created by Congress in the CARES Act and administered by HHS, through HRSA, to provide financial relief to healthcare providers during the COVID-19 pandemic.

A provider who retains a payment from the PRF must agree to certain restrictions on use of the payment. For example, the payment may only be used to prevent, prepare for or respond to coronavirus; to reimburse the recipient for health care related expenses or lost revenues that are attributable to coronavirus; and cannot be used to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. These restrictions led to speculation about how the payments could be used with regard to a potential COVID-19 vaccine, especially in light of both the required cold-storage and other logistical challenges of the vaccines currently under development as well as the Center for Medicare & Medicaid Services’ (“CMS”) promises to cover the cost of the vaccine.

After CMS announced that it would cover the cost of the vaccine, HHS clarified its position regarding the PRF. Because Medicare, Medicaid, and CHIP will pay for the doses and administration of the vaccine, providers cannot use the PRF payment to reimburse themselves for these expenses. However, PRF payments may be used for COVID-19 vaccine distribution and logistics, including purchase of additional refrigerators, personnel costs to provide vaccinations, and acquiring doses of a vaccine (including transportation costs not otherwise reimbursed). Moreover, funds may be used before an FDA-licensed or approved vaccine becomes available.

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The Trump Administration is slated to announce a plan, in the next few days, to cover the COVID-19 vaccine (when it is approved) under Medicare and Medicaid. According to the Centers for Medicare & Medicaid Services (CMS), it is Congress’s intent that Medicare beneficiaries have access to the vaccine once it is approved, free of cost sharing, to protect the most at-risk populations during the COVID-19 pandemic.

Congress attempted to mandate free COVID-19 vaccine coverage for all Americans in March with the CARES Act. According to the Trump Administration it is the intent that all Americans, including those receiving employer sponsored health insurance, receive the vaccine for free. However, certain hurdles are preventing Medicare and Medicaid beneficiaries from receiving the vaccine cost-free. Under the current rules, Medicare and Medicaid are not permitted to cover the cost of drugs authorized through emergency use protocols. Because this policy cannot be circumvented by Emergency Order, CMS, on October 28, 2020, released an Interim Final Rule with Comment Period (IFC) that established that any vaccine that receives Food and Drug Administration (FDA) authorization, either through an Emergency Use Authorization (EUA) or licensed under a Biologics License Application (BLA), will be covered under Medicare as a preventive vaccine at no cost to beneficiaries. Under the IFC, Medicare would reimburse vaccine administration at a rate of $28.39 for single-dose vaccines. For vaccines requiring a series of doses, Medicare would reimburse $16.94 for the first dose and $28.30 for subsequent doses.

In March, the White House initiated Operation Warp Speed (OWS), a national program to accelerate the development and distribution of a COVID-19 vaccine as well as COVID-19 diagnostics and treatments. The program is a joint operation between the federal government, scientific organizations, and the private sector, with the goal being to produce and distribute 300 million doses of safe and effective COVID-19 vaccines by January 2021. OWS will identify and select the most promising vaccine and other treatment candidates and offer coordinated government support to encourage their development. The OWS program has already invested in more than 5 vaccine candidates that have reached Phase 3 clinical trials to produce as many vaccines as possible. Investing in the vaccine candidates as well as their production will reduce the time it takes for delivery when the vaccines are available. Despite the White House’s desire to expedite vaccine distribution, the FDA will not speed up their approval process and will make solely scientific-based decisions.

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On October 22, 2020, the Department of Health and Human Services (“HHS”) announced changes to the allowable uses of a Provider Relief Fund (“PRF”) payment and also expanded the categories of providers eligible to receive a payment in the Phase 3 General Distribution. The PRF is a $175 billion fund created by Congress in the CARES Act and administered by HHS to provide financial relief to healthcare providers during the COVID-19 pandemic.

Acceptance of a PRF payment is conditioned on the acceptance by the provider of certain restrictions on how the payment may be used and the filing of reports in which the provider demonstrates compliance with these restrictions. One such restriction is that the funds may be used for “lost revenue attributable to the coronavirus.” When HHS first released the reporting requirements for PRF payments, it indicates that such lost revenues would be demonstrated by a negative change in year-over-year net patient care revenue from 2019 to 2020. Many saw this as placing an arbitrary cap on the amount of financial relief that struggling providers could receive from the PRF. In response to feedback, HHS has amended this requirement. Regarding use of the PRF payment to cover lost revenue attributable to coronavirus, HHS now requires that, “after reimbursing healthcare related expenses attributable to coronavirus that were unreimbursed by other sources, providers may use remaining PRF funds to cover any lost revenue, measured as a negative change in year-over-year actual revenue from patient care related sources.” (emphasis added).

HHS also announced expansion of the categories of providers who are eligible to apply for payments as part of the Phase 3 General Distribution of the PRF. The PRF previously included $30 billion Phase 1 and $20 billion Phase 2 General Distributions to eligible providers, primarily those that bill Medicare or Medicaid. The $20 billion Phase 3 General Distribution, announced October 1, 2020, was intended to provide financial relief to for providers who were either excluded from the initial two phases, or who were eligible under the first two phases but require additional funding to cover ongoing financial losses accrued during the pandemic. On October 22, 2020, HHS announced it was expanding Phase 3 eligibility to include the following providers, regardless of whether they accept Medicare or Medicaid:

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Beginning January 21, 2021, only COVID-19 diagnostic tests that are completed within two days will be paid at the current rate by Medicare. Since the outbreak of the COVID-19 pandemic, diagnostic testing has been an important part of strategies to combat the virus. In an early push to expand COVID-19 diagnostic testing capacity, on April 15, 2020, the Centers for Medicare & Medicaid Services (“CMS”) announced that Medicare would increase the payment to laboratories for high-throughput COVID-19 diagnostic tests from approximately $51 to $100 per test.

However, on October 15, 2020, CMS announced a change to this policy. Beginning January 1, 2021, COVID-19 diagnostic tests run on high-throughput technology will be paid at a base rate of $75 per test. A $25 per test add-on payment will then be paid to laboratories for a high throughput COVID-19 diagnostic test if the laboratory: (1) completes the test in two calendar days or less, and (2) completed the majority of all the previous months’ high-throughput COVID-19 diagnostic tests in two calendar days or less. The second requirement includes all of a laboratory’s high-throughput COVID-19 diagnostic tests in the precious month, not just those that are billed to Medicare. Thus, only tests that meet both these requirements will continue to be paid at $100 per test, while others will be paid at $75 per test. CMS indicates that this change is intended to support faster testing and also reflect the resource costs laboratories face to complete testing in a timely fashion.

In the event of an audit, CMS indicates that a laboratory that received the $25 per test add-on would be required to produce documentation of timeliness based on their performance in the month preceding the date of the test. These increased documentation requirements could effectively begin as early as December 2020. Because the new payment rates become effective January 1, 2021 but take into account tests completed in the previous month, laboratories will likely have to complete the majority of their tests run in December 2020 in two days or less to qualify for the add-on payment in January 2021.

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Medicare Administrative Contractor (“MAC”) CGS announced that beginning in October 2020, it would conduct post-payment reviews of hospice general inpatient (GIP) claims. Specifically, the reviews will be conducted if the claims were for 7 or more days of service, utilized revenue code 0656, and were submitted before March 1, 2020. These claims are particularly being targeted by CGS because GIP claims encompass a level of care intended for short term interventions, wherein symptoms can be controlled within 48 to 72 hours from the GIP setting. As such, if the claims were for 7 days or longer, CGS will flag the claim for review.

Common reasons for a denial following a hospice post payment review include: (1) Documentation does not indicate the patient had a terminal prognosis of 6 months or less; (2) Basic patient information is missing from the Notice of Election; (3) The physician narrative statement is not a true clinical narrative; (4) Failure to meet Face-to-Face requirements; and (5) The documentation did not support that the GIP level of care was reasonable or necessary.

An uptick in post-payment reviews leading to full-blown audits is to be expected for all provider types. As of August 3, the Centers for Medicare & Medicaid Services (“CMS”) announced that its suspension of Medicare claim audits would be lifted. Due to the 2019 Novel Coronavirus (“COVID-19”), CMS had suspended most audits on March 30, specifically pre- and post-payment reviews conducted by MACs. As such, providers should be vigilant about following their compliance plans. Not only are Medicare audits resuming, but private payors have also resumed audits. Specifically, laboratories are expected to see a large amount of private payor audits surrounding COVID-19 testing.

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Recently, the White House announced it will not postpone implementation of the hospital price transparency rule, set to take effect on January 1, 2021.  Based on President Trump’s Executive Order on Improving Price and Quality Transparency in Healthcare, issued on June 24, 2019, CMS released the “Ambulatory Surgical Center (ASC) Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule.” The rule allows patients to access hospital pricing information easily so that they have an idea of potential charges prior to receiving a bill and thus can shop for lower cost services.

Under the rule, hospitals are required to publish negotiated rates, gross charges, and discounted cash prices in a public, online format. The data must be free, in an easily accessible format, include a description of each item or service, and be updated yearly. Furthermore, hospitals must create a minimum of 300 “shoppable” healthcare services and display them in a consumer-friendly manner. Shoppable services are services that are often offered by multiple providers, so patients can research ahead of time and compare these services among various providers and make informed decisions on quality and cost. The goal is that as consumers have more price transparency and are more able to shop for their healthcare services, competition among hospitals and insurance providers will potentially increase and reduce healthcare costs as a result.

Hospitals oppose the transparency rule, claiming that it violates hospitals’ First Amendment rights and that CMS does not have the power to require hospitals to disclose their negotiated prices. Hospitals also claim the rule will increase administrative work, requiring more compliance costs. Although the American Hospital Association filed suit over the rule, a federal judge upheld it in June, concluding that CMS can mandate that hospitals reveal their negotiated prices. The AHA appealed the decision and oral arguments are scheduled for October 15.

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On October 6, 2020, the Centers for Medicare & Medicaid Services (CMS) released guidance giving hospitals until December 9, 2020 to comply with COVID-19 reporting requirements or risk termination from the Medicare and Medicaid Programs. CMS also released reporting requirements for influenza data, which are currently optional but which CMS plans to make mandatory in the coming weeks.

The COVID-19 reporting requirements were initially published in guidance by the Department of Health and Human Services (HHS) on July 29, 2020 and were incorporated into a Final Rule on September 2, 2020. Hospitals are required to report, on a daily basis, several data elements relating to their COVID-19 response. These data points include inpatient bed and ICU bed capacity and occupancy, total number of ventilator and total number of ventilators in use, total suspected or confirmed positive COVID-19 patients, numbers of COVID-19 patients receiving certain treatments, emergency department overflow, and the previous day’s COVID-19 deaths. CMS indicates this information is used to coordinate the federal response to the virus.

Beginning October 7, 2020, hospitals that are not in compliance with the reporting requirements or that are not reporting currently began receiving notifications from CMS. These letters gave hospitals three weeks to bring their reporting into compliance. Hospitals that do not come into compliance will continue to receive a series of enforcement letters. On December 9, 2020, hospitals that have been out of compliance with the reporting requirements for 14 weeks (beginning September 2, 2020, the release of the Final Rule) will be sent by CMS a letter terminating them from the Medicare and Medicaid programs. The termination will be effective within 30 days of the date of the notification of termination. Any terminated hospital will have the right to appeal, the ability come into compliance to avoid termination, and the opportunity to avail themselves of a 30-day reasonable assurance period under 42 CFR § 489.57. CMS indicates that the 14-week compliance window only applies to current enforcement. Future enforcement actions related to these reporting requirements will be subject to a shorter process.

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