Today, led by Chief Justice John Roberts, the Supreme Court upheld the constitutionality of the Affordable Care Act in almost all respects. While upholding the controversial individual mandate to purchase health insurance, the Court did alter one important aspect of the law, however, in that it limited the government’s ability to withhold all Medicaid funds from a state contingent on the states’ acceptance of the significant Medicaid expansion called for under the Act. Under the Court’s ruling, a state must be allowed to opt out of the Medicaid expansion without threatening the state’s current Medicaid coverage and federal funding. The text of the decision can be found here.
On February 14, 2010, CMS issued a Proposed Rule to implement the Affordable Care Act’s requirement that any person who receives a Medicare or Medicaid overpayment report and return the overpayment within 60 days of the date on which the overpayment was identified or the date of any corresponding cost report due, if applicable. The Proposed Rule would apply only to Medicare Part A and Part B providers and suppliers. CMS plans to issue further guidance for other stakeholders, including Medicaid managed care organizations and Prescription Drug Plans. CMS proposes to require providers to report and return overpayments identified within ten years of the date the overpayment as received.
Under the Proposed Rule, CMS will consider a provider to have identified an overpayment if it has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment. CMS provided several examples of reckless disregard or deliberate ignorance, including a provider’s failure to make a “reasonable inquiry” when it experiences a “significant increase in Medicare revenue and there is no apparent reason” to be of the existence of an overpayment.
CMS proposes to require providers and suppliers to report and return overpayments through existing reporting processes that Medicare Administrative Contractors (MAC) currently administer. Under the proposed “self-reported overpayment refund process,” Medicare providers and suppliers would report overpayments using forms that each MAC makes available on its website. CMS stated that it plans to develop a uniform reporting form in the future.
Comments on the proposed rule are due by April 16, 2011.
On Friday, January 27, 2012, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule revising Medicaid requirements for covered outpatient drugs. The purpose of the rule is to implement changes to Medicaid drug pricing and reimbursement requirements made by the Patient Protection and Affordable Care Act of 2010,1 as amended by the Health Care and Education Reconciliation Act of 20102 (collectively referred to as the “ACA”). The proposed rule was published in the Federal Register on Thursday, February 2, 2012. Comments to the proposed rule are due by 5 p.m. on April 2, 2012.
The proposed rule addresses a number of issues relevant to pharmaceutical manufacturers and pharmacies. The ACA increased the minimum rebate percentage for most single source and innovator multiple source drugs from 15.1 percent of the average manufacturer price (AMP) to 23.1 percent of AMP. However, until now, CMS had provided little guidance to manufacturers on the agency’s interpretation of the various revisions to AMP made by the ACA. The following are the highlights of the proposed rule, which are explained in more detail below—
- the definition of “retail community pharmacy”
- bundled sales
- moving away from the “default rule”
- bona fide service fees
- “5i” products
- the treatment of authorized generic drugs
- base date AMP recalculation
- line extensions
- rebates for drugs dispensed through Medicaid managed care organizations (MCOs)
- expanding rebate-eligible sales to include sales made to U.S. territories
- reporting revised pricing data
- AMP smoothing
- penalties for late filers
- pharmacy reimbursement.
On August 23, 2011, the Center for Medicare & Medicaid Innovation (Innovation Center) announced a new initiative regarding bundled payments for care improvement. The new bundled payment models combine payments for physician, hospital, and other provider services into a single, predetermined payment amount for all services furnished to a beneficiary during a defined episode of care. The Innovation Center offers four different payment models for interested applicants. Akin Gump has put together a Comparison of Bundled Payment Models Chart comparing some of the features of each of these models. Further detail is available in the full request for applications (RFA), available at the Innovation Center website.
Entities interested in applying for any of these models should note the following program deadlines:
- Interested organizations must submit a non-binding letter of intent by September 22, 2011
- Applications must be submitted to the Innovation Center by October 21
- Interested organizations must submit a non-binding letter of intent by November 4, 2011
- Organizations who want to be considered for receipt of data must submit a Research Request Packet containing specific information about their study design (including how they will use data to construct an episode definition and develop care episode redesign protocols) by November 4, 2011
- Potential applicants must also submit a Data Use Agreement by November 4, 2011
- Applications must be submitted by March 15, 2012
Today, April 7, 2011, the Centers for Medicare & Medicaid Services (CMS) published the proposed rule on the Medicare Shared Savings Program/Accountable Care Organizations (ACOs). In addition, CMS and the Office of Inspector General published the notice with comment period regarding waiver designs in connection with the Medicare Shared Savings Program. Both documents are available in today’s Federal Register.
On March 31, 2011, the Centers for Medicare & Medicaid Services (CMS or the “Agency”), along with several other federal agencies, released a long-awaited proposed rule and other notices that would implement the Medicare Shared Savings Program and Accountable Care Organization (ACO) provisions of the Patient Protection and Affordable Care Act (PPACA). The proposed ACO regulations and policies are contained in four separate documents: (1) a CMS proposed rule establishing ACOs; (2) a Department of Health and Human Services Office of Inspector General/CMS notice with comment period proposing waivers for the Anti-Kickback Statute, the Physician Self-Referral Law (the “Stark Law”) and certain provisions of the Civil Monetary Penalties law; (3) a Federal Trade Commission/Department of Justice proposed statement of antitrust enforcement policy for ACOs; and (4) an Internal Revenue Service request for comments addressing guidance for tax-exempt organizations participating in the program. This health reform update gives a preliminary analysis of CMS’s proposed rule. The other three publications are reviewed in separate updates prepared by members of Akin Gump’s ACO team.
Although the CMS proposed rule has only been issued in draft form, publication in the Federal Register is expected on or around April 7, 2011. Comments on the rulemaking must be submitted to CMS within 60 days of publication.
Health industry stakeholders highly anticipated the release of this rule and early CMS estimates indicate that 1.5 to 4 million beneficiaries would be assigned to ACOs in the first three years of the program (as compared to 45 million beneficiaries who have traditional fee-for-service (FFS) Medicare coverage). This estimate reflects only those enrolled in the Medicare Shared Savings Program; additional individuals are anticipated to be enrolled in commercial and Medicaid ACOs. In press conferences and releases surrounding the announcement of the proposed rule, CMS appears confident that the ACO Shared Savings Program will incent providers to furnish coordinated and efficient care and ultimately lower costs throughout the health care delivery system. Summarized below are some noteworthy takeaways from the ACO proposed rule.
On March 31, 2011, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule establishing accountable care organizations (ACOs) under the Medicare Shared Savings Program pursuant to provisions of the Patient Protection and Affordable Care Act (PPACA). CMS and the Department of Health and Human Services (HHS) Office of Inspector General (OIG) also jointly released a notice and solicitation of public comments (the Notice) regarding the waiver of certain federal fraud and abuse laws in connection with the Medicare Shared Savings Program.
Anticipating that the Medicare Shared Savings Program would potentially implicate fraud and abuse laws, Congress included a provision in the PPACA that grants the Secretary of HHS the authority to waive the application of certain fraud and abuse laws “as may be necessary” to implement the program.1 The fraud and abuse laws addressed by the proposed waivers are the Physician Self-Referral Law (the “Stark Law”),2 the federal Anti-Kickback Statute,3 and a provision of the Civil Monetary Penalties law (CMP Law), the so-called Gainsharing CMP, that prohibits a hospital from making a payment directly or indirectly to induce a physician to reduce or limit services to Medicare and Medicaid beneficiaries.4 Industry stakeholders have expressed concerns that without such waivers the establishment and operation of ACOs would necessarily involve the creation of financial relationships between physicians and hospitals and other individuals and entities that would otherwise be restricted or prohibited by these laws.
The Notice sets forth three proposed waivers and solicits comments on a number of related issues. To be eligible for waivers from the fraud and abuse laws, an ACO must enter into a formal agreement with CMS to participate in the Medicare Shared Savings Program and the ACO, ACO participants and ACO providers/suppliers would be required to comply with the various ACO requirements found in Section 1899 of the Social Security Act5 (as promulgated by the PPACA) and the ACO implementing regulations, including the requirements regarding transparency, reporting and monitoring.
The requirements for the proposed waivers are set forth below—
Today, several federal agencies issued proposed rules or notices regarding Accountable Care Organizations (ACOs)—
- CMS issued a proposed rule that establishes ACOs under the Medicare Shared Savings Program.
- HHS OIG and CMS jointly issued a notice with comment period addressing proposals for waivers for the anti-kickback statute, the physician self-referral law and certain provisions of the civil monetary penalty law, as related to the Shared Savings Program. They also issued a solicitation for comments on additional waivers for program as well as for separate waiver authority for the Center for Medicare and Medicaid Innovation.
- FTC and DOJ jointly issued a proposed antitrust policy statement for ACOs participating in the Shared Savings Program.
- The IRS issued a request for comments addressing guidance for tax-exempt organizations participating in the Shared Savings Program through ACOs.