Baker Tilly healthcare update January 27, 2015

At the agencies

On January 26, the Department of Health and Human Services (HHS) released an announcement that they are moving, more quickly than anticipated, away from a traditional fee-for-service model for Medicare towards alternative payment models that will focus on quality.  According to the announcement, HHS is setting a goal of moving 30 percent of fee-for-service Medicare payments into alternative pay models by 2016 and 50 percent by 2018.  Examples of alternative payment models include accountable care organizations (ACOs) and the use of bundled payments.  HHS does recognize that not all providers and physicians will be able to move to ACO’s or bundle payment models, but they would still like to at least link 90 percent of Medicare payments to quality metrics, such as the use of readmission reduction programs, in some form by the end of 2018.  To support these efforts, HHS is creating a Health Care Payment Learning and Action Network in which the agency will work with representatives from payers and providers to expand these value-based payment models.  The first meeting of this Network is planned for March 2015. 

On January 16, the Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner announced that she will be resigning from her position.  Tavenner has been serving in CMS’s top post since 2011 but was not confirmed by the Senate until 2013.  She will be leaving her post in February and Principal Deputy Administrator, Andy Slavitt, will become the acting administrator upon her departure.

In a report released on January 14, the Centers for Disease Control and Prevention (CDC) has concluded that hospital-acquired central line-associated infections have fallen 46 percent overall from 2008-2013.  According to the report, central line-associated MRSA and C. difficile infections have fallen by 8 percent and 10 percent respectively.  Although this report shows progress in hospitals’ ability to implement improvements to reduce infection rates, the CDC would like to see further reductions in the frequency of these infections. 

On the Hill

The House Energy and Commerce Committee held two days of hearing on January 21 and 22 to explore policy opportunities to permanently dissolve the Sustainable Growth Rate (SGR) formula which is used to set payments for physician services under Medicare Part B.  The SGR requires annual legislation from Congress referred to as the “doc fix” to ensure that Medicare payments to physicians are not cut substantially every year.  The current “doc fix” is set to expire in March.  Although the hearing highlighted that there is bipartisan agreement that the SGR must be replaced with a better alternative, there is still no agreement on how to pay for that replacement.  Committee members also heard testimony from witnesses that stressed the need to make modifications to the overall Medicare program while they explore ideas to repeal the SGR.

On January 13, Senator Orrin Hatch (R-UT) introduced a bill to repeal the medical device tax that was created under the Affordable Care Act (ACA).  A similar bill was introduced in the House earlier this month.  Both bills enjoy strong bipartisan support and they are expected to pass when brought up for votes.

On January 15, the Medicare Payment Advisory Commission (MedPAC) voted to include several recommendations in their March report to Congress in which they advise Congress on numerous aspects of Medicare policy.  Among the recommendations that MedPAC voted to approve are: making site-neutral payments for 22 conditions treated by skilled nursing facilities and inpatient rehabilitation facilities; replacing the Primary Care Incentive Program with one that would pay doctors per beneficiary rather than per visit; requiring ambulatory surgical centers to submit cost data; and eliminating the payment rate updates for hospice care, long-term care hospitals, and ambulatory surgical centers. 

MedPAC members also discussed whether or not to propose reforms to the recovery audit contractor program (RAC).  In light of recent changes made by the CMS to the RAC program, some of the Commission’s members suggested waiting until the new RAC program changes were implemented before moving forward with an official recommendation to Congress.  MedPAC Chairman Glenn Hackbarth said that the Commission may have draft RAC program modifications in March, with official final recommendations possibly crafted by April.

In the courts

On January 20, the Supreme Court heard oral arguments regarding a challenge to Medicaid rates.  The case, Armstrong v. Exceptional Child Center, was brought by providers in Idaho and will determine whether or not providers have the right to sue a state over what the provider has determined to be a low Medicaid payment.  The lawsuit was first filed in 2009 by a group of providers that treated disabled Medicaid beneficiaries and argued that Idaho violated federal law when the state did not increase Medicaid reimbursement rates beyond 2006 even though the cost of services had increased.  Some of the Justices questioned whether or not these types of lawsuits would give courts an undue ability to determine state budget levels.  In seeming opposition to that position were other Justices’ concerns that there was no practical remedy for providers to question Medicaid payment rates if they are not given the right to sue.

The Community Legal Services of Philadelphia has filed its second lawsuit claiming that outgoing Governor Tom Corbett’s alternative Medicaid plan violates state code.  This lawsuit targets the part of the “Healthy PA” plan that cut Medicaid benefits without the Corbett Administration making changes to state regulations that provide more generous benefits to Medicaid beneficiaries.

For more information on this topic, or to learn how Baker Tilly healthcare specialists can help, contact our team.