Three doctors standing together in a hospital hallway

Baker Tilly's The pulse of healthcare for July 6, 2015

Heart icon

At the agencies

On June 16, the Health Resources and Services Administration (HRSA) proposed a fine for drug manufacturers that intentionally overcharged providers covered by the 340B drug discount program. The proposed rule would implement a civil monetary penalty for manufacturers, not to exceed $5,000, for each time they overcharged a provider.

On June 18, the Centers for Medicare and Medicaid Services (CMS) announced that the 17 practices participating in the Independence at Home demonstration project saved over $25 million by providing care to chronically ill beneficiaries in their homes. Sen. Ron Wyden (D-OR) has stated he will push to both extend and scale up the program; the Senate has already passed S. 971 extending the demo for two more years, and a similar bill cleared the House Ways and Means committee. Passage of this legislation could ultimately lead to the provision of more home and community based services.

On June 26, CMS proposed a multitude of technical adjustments to the End-Stage Renal Disease (ESRD) payment rules, including the following five proposed changes. Using a new regression analysis based on previous years’ data (2012 and 2013), the rule proposes decreasing the base payment rate to $230.20, a reduction of $9.23. Despite this base payment decrease, it is estimated by CMS that the impact of all the proposed rule changes would increase payments to ESRD facilities by 0.3 percent overall, with a 0.5 percent increase in payments to hospital-based facilities and a 0.2 percent increase to freestanding facilities. 

The proposed rule also includes changes to their outlier policies. The fixed-dollar loss amounts for pediatric beneficiaries and Medicare Allowable Payments (MAPs) for children would be reduced to $49.99 and $37.82, respectively. Fixed-dollar loss amounts for adults and adult MAPs would decrease to $85.66 and $48.15, respectively. Payment adjustments for two comorbidities – bacterial pneumonia and monoclonal gammopathy – would be eliminated.  Substantial changes would be made to the low-volume payment adjustment, including removing grandfathering from the criteria and excluding commonly owned facilities from qualification if they are located within five miles of each other. Lastly, this rule proposes to define when drugs are no longer considered “oral only,” would add new injectable and IV dialysis service drugs to the bundled payment system, and would prevent CMS payments for oral-only drugs until 2025.   

Legislative building icon

On the Hill

On June 17, the House passed four Medicare Advantage Reform bills which are now headed to the Senate. One of these, H.R. 2582, is relevant particularly to providers. If passed, it would prohibit CMS from terminating providers’ Medicare Advantage plan contracts simply for failing to achieve a minimum quality rating under the 5-star rating system.  

On June 23, the House repealed the Affordable Care Act’s (ACA) Independent Payment Advisory Board (IPAB). Even if the IPAB repeal failed, it is important to note that its provisions have never been triggered and would not be triggered if the ACA continues to bend the cost curve in Medicare.

Also on June 24, the Senate Finance Committee passed twelve Medicare and Medicaid bills which should be voted on after the July recess, five of which are provider relevant. S. 607 extends the Rural Community Hospital demonstration project for five years and S. 599 extends the Emergency Psychiatric Care demonstration project. The Electronic Health Fairness Act (S. 1347) prevents Medicare beneficiaries treated by providers at ambulatory surgical centers as counting towards the electronic health record meaningful use requirement. S. 313 prevents disruptions in physical therapy by allowing physical therapists to designate substitute therapists in their stead, and S. 1349 extends the moratorium on requiring supervising physicians to be physically present in hospitals when beneficiaries are receiving outpatient care.

Judicial building icon

In the courts

On June 18, the Medicare Fraud Strike Force led a nationwide sweep, charging 243 providers with Medicare fraud. The estimated amount of the false billings by the charged nurses, doctors, and other licensed medical professionals is $712 million. Most notably, over 40 of the charges were leveled against providers participating in the Medicare Part D program, including billing Medicare for drugs that were either unnecessary, not prescribed, or never given to patients.

On June 25, the Supreme Court announced the highly-anticipated decision in the King v. Burwell case, ruling 6-3 to uphold the ACA’s subsidies, knocking down the challenge that would have eliminated subsidies in over 34 states without their own exchanges. Chief Justice John Roberts wrote the opinion for the court, which stated that “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” This decision ensures that individuals will have continued access to insurance subsidies, and subsequently, can be insured to obtain the healthcare they need.

This massive victory for the administration also represents a big win for providers, as representatives from the American Hospital Association, American Medical Association, and America’s Essential Hospitals all agreed. Additionally, it is worth noting that after the court’s decision was announced, many hospital stock prices rose anywhere from 6 to 10 percent by the close of business Thursday, with the business community feeling much more confident in the stability of America’s healthcare system.

Pencil icon

News to note

On June 17, Health Affairs published a study showing that not-for-profit hospitals received $24.6 billion in tax breaks in 2011, which is almost double the amount estimated that they would receive in 2002 by a Congressional committee. These tax breaks are undergoing more scrutiny, according to the study’s authors.

On June 22, Avalere Health released an assessment of Medicare’s current quality measures, with the finding that many serious diseases are not adequately represented amongst the measures.  Since quality measures are a large part of how value-based payments for services are determined, the organization recommended more meaningful quality measures for oncology, amongst other areas.

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

Related sections

Advisor greets client in office
Next up

Talent management, trends and strategies within manufacturing – are you leading or lagging?