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A Non-COVID-19 Update . . . Yes . . . You Read That Correctly

May 26, 2020

Although everyone’s attention has been focused on COVID-19, other aspects of healthcare continue to move forward.  This update focuses on non-COVID-19 issues like five recent federal proposed payment rules, the recent Medicare Advantage Rate Announcement, and critical federal litigation.

For more information about this blog post, please contact Khaled J. KleleRyan M. Magee, or Labinot Alexander Berlajolli.


Final Rule on Federally-Facilitated Exchanges and State-Based Exchanges

85 FR 29164 – Final – The Centers for Medicare & Medicaid Services ("CMS") issued a final rule setting forth standards for issuers, exchanges, and excepted benefit health reimbursement arrangements.  For 2021, the final rule maintains user fee rates at 3% for plans on the federally facilitated exchange and 2.5% for plans on the state-based exchange on the federal platform.  For states that run their own exchanges, CMS is giving them more flexibility to customize how quality information is displayed for consumers.  A more controversial aspect of the final rule updates maximum annual limitations on cost-sharing, which is likely to increase out-of-pocket spending for consumers who already have annual out-of-pocket spending close to the annual limit.  The final rule becomes effective July 13, 2020.

CMS Proposed Payment Rules

85 FR 20949Proposed CMS proposed a rule to update the hospice wage index, payment rates, and cap amount for fiscal year (FY) 2021.  Specifically, CMS proposed increasing hospice payment rates by 2.6 percent in 2021, which would yield an additional $580 million for the Medicare Hospice Benefit.  CMS also wants to adopt the most recent Office of Management and Budget statistical area delineations to calculate wage indexes for hospices, with a 5 percent cap on wage index decreases.   Comments are due by June 9, 2020.

85 FR 20914– Proposed – This proposed rule would update the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2021. Specifically, CMS proposed increasing the SNF payment rates by 2.3 percent, which would yield an additional $784 million in payments.  CMS also wants to adopt the most recent Office of Management and Budget statistical area delineations to calculate wage indexes, with a 5 percent cap on wage index decreases.  The proposed rule includes changes to the International Classification of Diseases, Version 10 (ICD-10) codes to classify SNF patients into payment groups.  CMS is also proposing to align the SNF Value-Based Purchasing Program to apply the 30-day Phase One Review and Correction deadline to the baseline period quality measure quarterly report, and to establish performance periods and standards for upcoming program years.  Comments are due by June 9, 2020.

85 FR 20625– Proposed – CMS proposed a rule to update the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by Inpatient Psychiatric Facilities (IPF), which include psychiatric hospitals and excluded psychiatric units of an Inpatient Prospective Payment System hospital or critical access hospital. Specifically, CMS proposes a 2.4 percent (or roughly $100 million) increase in IPF payments.  CMS also proposes that wage index decreases be capped at 5 percent, and that the most recent Office of Management and Budget (OMB) statistical area delineations be adopted.  Comments are due by June 9, 2020.

85 FR 22065 – Proposed – CMS proposed a rule to update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2021.  As with the proposed rules for hospices, SNFs, and IPFs, CMS wants to adopt the most recent Office of Management and Budget statistical area delineations.  CMS also proposes a 5 perfect cap on any wage index decreases, applied in a budget neutral manner.  The proposed rule amends the IRF coverage requirements to remove the post-admission physician evaluation requirement, codify existing documentation instructions and guidance, and allow non-physician practitioners to perform certain requirements that are currently required to be performed by a rehabilitation physician.  Comments are due by June 15, 2020.

CMS-1735-P – Proposed This rule, which will not be published until May 29, proposes updates to Medicare payment policies for hospitals paid under the Inpatient Prospective Payment System (IPPS) and the Long‑Term Care Hospital (LTCH) Prospective Payment System (PPS) for fiscal year (FY) 2021.  Despite fierce opposition from hospitals, CMS is continuing with its price transparency rule finalized in 2019. CMS proposes to collect a summary of certain data, including hospitals’ median payer‑specific negotiated inpatient services charges for Medicare Advantage organizations and third-party payers.  Overall payments for inpatient services would increase by roughly 1.6 percent, or $2.07 billion.   The rule also includes proposals to support access to new antimicrobials (antibiotics to treat drug‑resistant infections) for Medicare beneficiaries, including the alternative new technology add-on payment (NTAP) pathway.  CMS is also proposing a separate new hospital payment category for Chimeric Antigen Receptor (CAR) T-cell therapy.   CMS issued a fact sheet regarding the proposed rule.  Comments are due by July 10, 2020.

OIG Proposes an Increase in Civil Monetary Penalties

85 FR 22979 – Proposed – The Office of Inspector General (OIG) issued a proposed rule that would amend the civil money penalty (“CMP”) rules. First, this proposed rule would modify 42 CFR Parts 1003 and 1005 to add the Department of Health and Human Services’ (“HHS”) new authority related to fraud and other misconduct involving grants, contracts, and other agreements into the existing regulatory framework for the imposition and appeals of CMPs. Second, Section 4004 of the Cures Act added Sec. 3022 to the Public Health Service Act, which, among other provisions, provides OIG the authority to investigate claims of information blocking and authorizes the Secretary of HHS to impose CMPs against individuals who the OIG has determined committed information blocking.  Finally, the proposed regulation would codify the increased civil money penalties, which were increased under the Bipartisan Budget Act of 2018. Comments are due by June 23, 2020.

CMS Publishes CY 2021 Rate Announcement for Medicare Advantage and Part D Plans

CMS has released its Calendar Year (CY) 2021 Rate Announcement, which finalizes updates and changes to the methodologies used to pay Medicare Advantage organizations, PACE organizations, and Part D sponsors discussed in Parts I and II of the CY 2021 Advance Notice.  The Rate Announcement addresses comments received on Parts I and II of the CY 2021 Advance Notice published on January 6 and February 5, 2020, respectively. As part of this Announcement, CMS released the CY 2021 Rate Book and calculation data, which provides detail on the county-level Part C benchmarks, and a fact sheet summarizing the Rate Announcement.


The Fifth Circuit Rules that DHS Calculations Include Payments from Medicare and Private Payers

As a follow-up to our previous update, the U.S. Court of Appeals for the Fifth Circuit recently ruled that Disproportionate Share Hospital (DHS) payment calculations do include Medicare and private insurer payments, concluding the rule was consistent with the Medicaid Act. DSH payments are supplemental payments made to hospitals that serve a disproportionate share of indigent patients. The payments are limited to the cost incurred for taking care of these patients. In 2017, CMS issued a rule that incurred costs should include net payments from third parties like Medicare and private health plans, which would reduce the DHS payments. The Court overturned  a lower court decision that sided with a challenge of the rule led by eight Mississippi hospitals.  The case is Baptist Memorial Hospital et al v. Alex M. Azar, II et al. Case No. 18-60592.

United States Supreme Court Rules that Congress Bilked ACA Insurers

The Supreme Court recently ruled that the federal government acted unlawfully when it reneged on a commitment to shield Affordable Care Act (ACA) insurers from heavy financial losses. The ruling reversed a Federal Circuit decision that left in place Congress' denial of $12 billion in "risk corridor" funding, which the ACA dangled as an incentive for insurers during the law's first three years of operation. The risk corridor program was funded partly with contributions from highly profitable ACA insurers, but there was still a $12 billion shortfall. Litigation has centered on the ACA's directive that the U.S. Department of Health and Human Services "shall pay" money to certain money-losing insurers — a directive that insurers have called unequivocal and inescapable. The Supreme Court agreed and rejected the federal government's argument that the language essentially had an asterisk allowing risk corridor dollars to be spent only if specifically appropriated by Congress. The case is Maine Community Health Options v. U.S., Case No. 18-1023.

If you have any questions about the issues discussed in this Update, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

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