Kaitlin Lavin
Executive Editor
Loyola University Chicago School of Law, JD 2017

 

The Centers for Medicare and Medicaid Services (CMS) recently proposed a new rule in the Federal Register that addresses changes in Medicare payment policies. The proposed rule aims to inform providers of proper billing practices and prevent fraud and abuse.  This post will discuss some of the relevant provisions.

Provider & Supplier Enrollment

Consistent with traditional Medicare, this rule would require those providing healthcare items or services to beneficiaries in the Medicare Advantage (MA) program to be enrolled in Medicare with approved status. CMS is hopeful that this requirement will protect beneficiaries and prevent fraud and waste through careful screening of providers and suppliers to ensure that they are qualified to deliver items and services. However, since CMS does not have direct oversight over providers and suppliers in MA organizations, it will require MA organizations to screen in-network providers. Additionally, CMS believes that it can further ensure that providers are qualified by conducting its own rigorous screening and rescreening. In some cases, screening may include risk-based site visits or fingerprint-based background checks. CMS will continue to review and monitor compliance with enrollment requirements. The proposed rule suggests that screening for qualified providers and suppliers will prevent overutilization of services and protect beneficiaries from harmful practices. For example, CMS could screen for a provider that may perform unnecessary tests or overprescribe pharmaceutical drugs. CMS believes screening for providers that may overutilize services would protect taxpayers and Medicare Trust Funds by preventing waste. If healthcare providers or suppliers violate federal rules or regulations, CMS will be able to terminate their participation in the MA program. Although CMS does not believe this will affect network adequacy or have a substantial impact on MA organizations’ ability to contract with providers, CMS sought comments on the potential impact.

CMS proposes to prohibit MA organizations from paying any providers or suppliers that have been excluded by the Office of Inspector General or revoked from the Medicare program. The proposed rule would permit a first-time allowance for payment if the MA organization provides notice to the provider and beneficiary that no future payments shall be made. Further, CMS is proposing provisions that would reserve the right to terminate a contract and impose sanctions if an MA organization does not comply.

Under the proposed rule, CMS would also like to expand the Diabetes Prevention Program (DPP). DPP organizations would similarly be required to enroll as suppliers and comply with enrollment, program integrity, and payment rules. CMS expressed its concern regarding the potential for fraud and abuse by requiring suppliers to submit inaccurate or duplicative claims.

Physician Self-referral Updates

In addition to adding enrollment requirements for MA organizations, CMS proposed updates for the physician self-referral law. The physician self-referral law (also known as “Stark”) prohibits physicians from making referrals for certain designated health services (DHS) to an entity with which he or she has a financial relationship (ownership or compensation), unless an exception applies. The Stark law was enacted to protect patients and deter physicians from providing unnecessary services to increase profits.

CMS has previously addressed self-referrals for unit-based compensation. Arrangements for rented space or equipment may satisfy one of the relevant exceptions if the rental charges over the term of the lease are set in advance, consistent with fair market value, are not determined based on volume and value, and do not vary over time. CMS has said that, “arrangements between a physician lessor and entity lessee under which the physician receives unit-based payments are inherently susceptible to abuse because the physician lessor has an incentive to profit from referring a higher volume of patients to the lessee.”

CMS has decided to re-propose a limitation under the self-referral law based on the D.C. Circuit’s opinion in Council for Urological Interests v. Burwell, which addressed the prohibition on per-click rental charges for leased equipment. Under Council for Urological Interests v. Burwell, a physician group brought suit challenging regulations that prevented physician that leased medical equipment from referring their patients to the hospitals leasing the equipment. The Court found in the government’s favor, and now with the support of the D.C. Circuit, CMS wants to add provisions to prohibit rental charges from being determined by a “formula based on per-unit of service rental charges, to the extent that such charges refect services provided to patients referred by the lessor to the lessee.” The proposed rule would still permit per-service rental charges for space or equipment, but only where physicians refrain from referring patients to those services.

Waiver of Payment Rules or Other Medicare Requirements for Track 3 ACOs

The proposed rule will also provide protections for some beneficiaries that require a short-term, intensive stay in a skilled nursing facility (SNF). Track 3 Accountable Care Organizations (ACOs) prospectively determine enrollees and allow for beneficiaries to opt into the ACOs. The ACOs were created under the Medicare Shared Savings Program and they are transitioning from fee-for-service payments to accountable care payments.

Normally, to qualify for services at a SNF, Medicare beneficiaries must have had a prior inpatient hospital stay of at least three consecutive days because CMS wants to prevent providers from unnecessarily treating beneficiaries on an inpatient basis when they can be treated as outpatients. There has been great confusion over this rule because CMS did not clearly define “inpatient.” In 2013, CMS adopted the Two-Midnight rule which says that inpatient admissions are only payable if the admitting practitioner reasonably expects a hospital stay to span at least two midnights.

However, in June of 2015, CMS published a rule allowing Track 3 ACOs to apply for waivers, when working with affiliated SNFs, to help these ACOs improve quality and lower costs. Since that rule was implemented, CMS has learned that there may be limited situations in which a beneficiary’s Part B coverage terminates under the ACO while that beneficiary is still receiving services in a SNF. The lag in communication from CMS to ACOs regarding the termination of services could cause a SNF affiliate to admit a beneficiary without realizing that the beneficiary needs a three-day inpatient hospital stay first to get coverage for SNF services. And as a result, beneficiaries could be charge for non-covered SNF services. CMS is proposing to modify the waiver by adding a ninety-day grace period to permit beneficiaries to continue receiving SNF services if three conditions are met:

1. the beneficiary was prospectively assigned to a waiver-approved ACO but was excluded in the most recent quarterly list;
2. the SNF affiliated services are delivered within ninety days following the date CMS provides the exclusion list to the ACO; and
3. CMS would have otherwise made payment for the services but for exclusion from the ACO’s prospective list of beneficiaries. CMS would additionally like to provide beneficiary protection where the ACO or SNF makes a mistake in deciding the patient should receive services in a SNF. In that case, CMS would not pay the SNF for services and the SNF would be prohibited from balance billing the patient. The ACO would also be required to submit a corrective action plan to prevent similar problems in the future.

Comments

Physicians, providers, associations, and other stakeholders submitted a total of 5,950 comments. Some of these commentaries include the American Medical Association, PhRMA, and of course the Council for Urological Interests. Many stakeholders expressed concerns regarding billing codes and physician reimbursement. Other comments were appreciative and approved of the proposed changes. The proposed rule indicated that CMS was very interested in receiving comments from the industry to consider, but it will have great discretion in how it drafts the final rule.