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CMS releases final ACO rule

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At the agencies

On June 6, 2016, the Centers for Medicare and Medicaid Services (CMS) issued the final rule that governs Accountable Care Organizations (ACOs). Some of the primary aspects of the rule include changes to the benchmarking methodology particularly dealing with the subsequent period, incentives for care coordination and quality improvement, encouragement to transition to a performance based risk assessment, and policies for reopening payment determinations to make corrections after financial calculations have been performed and ACO shared savings and shared losses for performance have been determined.

Another significant change in the final rule is that CMS will use regional, rather than national, spending growth rates to update the ACO financial targets. CMS removed the adjustment that accounts for savings generated under an ACO prior to the agreement period in order to limit the link between an ACO’s performance and its future benchmarks. This will help measure efficiency against providers in the same regional market rather than comparing the ACO’s performance to its prior performance. Also under the final rule, an ACO can renew its shared savings agreement for another year or choose to apply for a two sided risk model. After the fourth year, ACOs will transition to performance based risk track for three years beginning in 2017. The last important change included in the final rule is the establishment of both timeframes and criteria for ACOs to appeal to CMS’s calculation of bonuses and penalties. ACOs will now have four years to challenge an initial determination of shared savings or shared losses for good cause.

CMS announced that this year, Illinois, Florida, and Texas will implement a three year Medicare pre-claim review demonstration for home healthcare services and in 2017 Michigan and Massachusetts will implement their own demonstrations. CMS hopes the pre-claim review will improve methods for the identification, investigation, and prosecution of Medicare fraud occurring among Home Health Agencies (HHA). The pre-claim review demonstration does not create new clinical documentation requirements, but requires HHAs to submit their payment information earlier in the process. The pre-claim review request must occur within the first 30 days after their Request for Anticipated Payment is processed and before the claim is submitted by the HHA. HHAs in the demonstration states that fail to use the new pre-claim review process may have their payment claims denied. CMS will reduce payments by 25% for claims that are deemed payable but did not first receive a pre-claim review decision after the demonstrations have been in place in the states for three months.

On June 9, in response to criticisms that the application process for doctors requesting experimental drug access outside of official drug company clinical trials was too slow, the Food and Drug Administration (FDA) has released a new streamlined application form for experimental drugs that is estimated to take 45 minutes to complete. The FDA also released guidance pamphlets on how patients can request access to these drugs and how they can be charged; however, these informational guides only clarify rules and do not contain any policy changes. The original criticism of the FDA’s lengthy application process had prompted a majority of states to pass their own local “Right to Try” laws, although no local legislation has actually resulted in a patient receiving experimental medicines.

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On the Hill

The House passed a bill to exempt qualifying hospitals from the outpatient site neutral payment rules implemented in 2015. To qualify for the exemption, the bill will require the hospitals to have had facilities under construction on November 2, 2015, and the construction must be completed by the end of 2016. The bill also sets 2020 as the new extended deadline for CMS to eliminate Medicare Advantage plans and extends the Rural Community Demonstration Program for five more years.

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In the courts

A New Jersey skilled nursing facility’s challenge of a National Labor Relations Board (NLRB) order to reinstate employees who were unlawfully terminated for participating in union activities was denied on Monday after the Third Circuit determined that there was substantial evidence of unlawful interrogation and retaliation. The three-judge panel denied Somerset Valley Rehabilitation Center and Nursing Center’s petition to review a 2015 NLRB decision that it committed several unfair labor practices including terminating four nurses in violation of the National Labor Relations Act over the course of a successful 2010 unionizing campaign.

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In the states

St. Michael’s Medical Center in Newark, New Jersey, has agreed pay $450,000 after the US Attorney’s Health Care and Government Fraud Unit brought allegations that the hospital falsely billed Medicare and Medicaid for cardiac procedures that patients did not need. The hospital allegedly submitted claims for catheterizations, stents, and other procedures that were determined to be medically unnecessary. The Federal Bureau of Investigation and the US Department of Health and Human Services Office of Inspector General assisted in the investigation. Prime Healthcare Services acquired St. Michael’s Medical Center in November 2015 through a bankruptcy auction, and has committed $50 million in capital improvements for the facility over the next five years. 

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