Budget agreement includes technical changes to MACRA, notable policy changes to other health care programs

The President on February 9, 2018, signed H.R. 1892, the Bipartisan Budget Act of 2018, which sets discretionary spending caps for the federal government for fiscal years (FY) 2018 and 2019 while also reauthorizing federal funding and making important policy changes to a number of health care programs. The Medicare Part B physician fee schedule, including implementation of the Medicare Access and CHIP Reauthorization Act (MACRA); the Children’s Health Insurance Program (CHIP); and state allotments to Medicaid Disproportionate Share Hospital (DSH) payments are among the health care issues addressed in the law.

Health care providers, plans, and other industry stakeholders may consider revisiting strategic, operational and compliance plans in light of a number of provisions of the law.

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ONC seeks comment on Trusted Exchange Framework aimed at facilitating greater interoperability of health information

On January 5, 2018, the Department of Health and Human Services’ Office of the National Coordinator for Health Information Technology (ONC) released a draft Trusted Exchange Framework and Common Agreement (TEFCA), outlining a common set of principles for trusted exchange of health data and interoperability between health information networks (HINs) and proposing a Common Agreement aimed at operationalizing the principles for data exchange in an effort to drive interoperability. ONC released the draft framework in compliance with provisions of the 21st Century Cures Act, which was enacted in December 2016.

The draft framework is part of an effort “to scale interoperability nationwide by providing a single ‘on-ramp’ to allow all types of healthcare stakeholders to join any health information network they choose and be able to participate in nationwide exchange, regardless of what health IT developer they use, health information exchange or network they contract with, or where the patients’ records are located.”

Comments on the draft framework are due to ONC by February 20, 2018. ONC will post comments on its website. ONC will consider comments on the draft framework as it develops a final TEFCA product, which will be posted on the ONC website and published in the Federal Register.

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HHS Office of Inspector General flags MACRA vulnerabilities related to clinician awareness, program integrity

The Health & Human Services (HHS) Office of the Inspector General (OIG) in December 2017 released a report indicating that with regard to the implementation of the Medicare Access and CHIP Reauthorization Act (MACRA), the Centers for Medicare and Medicaid Services (CMS) continues to face vulnerabilities related to clinician awareness of MACRA’s Quality Payment Program (QPP) and program integrity to avoid fraud and improper Medicare Part B payment adjustments.

In a similar report from 2016, HHS OIG highlighted vulnerabilities related to providing guidance and technical assistance to clinicians and to developing information technology (IT) systems to support data reporting, scoring and Part B payment adjustments. HHS OIG found that CMS has made “significant efforts” to address these vulnerabilities.

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CMS releases part II of the 2019 Medicare Advantage and Part D Advance Notice and Draft Call Letter

The Centers for Medicare and Medicaid Services (CMS) on February 1, 2018, released the second part of the 2019 Medicare Advantage (MA) and Part D Advance Notice, and the Part D draft Call Letter, proposing average increases to MA payment rates for 2019 of 1.84% plus a potential further increase of 3.1% as a result of expected changes to risk scores for MA Plans.

The first part of the Call Letter was released on December 27, 2017, in compliance with provisions of the 21st Century Cures Act that require CMS to fully implement changes to the Medicare risk adjustment model by 2022.

Comments for both parts of the proposed Advance Notice and the Part D Call Letter are due to CMS by March 5, 2018. CMS expects to publish the final 2019 Rate Announcement and final Call Letter by April 2, 2018.

Highlights of key provisions of the advance notice and draft call letter are provided below.

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Latest continuing resolution reauthorizes funding for CHIP, delays ACA tax provisions

On January 22, 2018, the President signed a continuing resolution (CR) to maintain funding for the federal government at current levels through February 8, 2018, while reauthorizing federal funding for the Children’s Health Insurance Program (CHIP) for six years through fiscal year 2023 and delaying the effective date of some taxes and fees enacted as part of the Affordable Care Act (ACA).

With an eye on the new February 8 deadline, Congress will be working on negotiations related to spending caps, appropriations for the remainder of fiscal year 2018 and a number of outstanding health care issues.

Highlights of the health care provisions of the most recent CR are provided below.

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CMS issues guidance for states to seek Medicaid waivers including work requirements

On January 11, 2018, the Centers for Medicare and Medicaid Services (CMS) released a State Medicaid Director Letter that provides detailed guidance for states interested in establishing work or other community engagement requirements for certain adult beneficiaries to enroll in or continue coverage under their state’s Medicaid program under a waiver of Section 1115 of the Social Security Act.

CMS on Friday, January 12, 2018, approved Kentucky’s 1115 waiver including work requirements, making it the first of the 10 states seeking such waivers to win approval. At least one other state has expressed interest in such a waiver since CMS released the letter.

The Obama Administration rejected work requirements as part of state 1115 waiver applications, asserting that such requirements were not permitted under federal law. A number of advocacy organizations have said they will consider court challenges to block waivers including work requirements from taking effect.

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CMS announces new voluntary bundled payment model

On January 10, 2017, the Centers for Medicare and Medicaid Services (CMS) through the Center for Medicare and Medicaid Innovation (CMMI) announced a new Medicare bundled payment model, Bundled Payments for Care Improvement Advanced (BPCI-Advanced), which will be an advanced alternative payment model (AAPM) under the Medicare Access and CHIP Reauthorization Act’s (MACRA) Quality Payment Program (QPP). The model establishes alternative payment structures for 32 distinct clinical episodes, where providers can participate on a voluntary basis and receive performance-based payments for delivering care at less than a target amount and meeting quality standards.

Following on the 2013 CMMI BPCI initiative, BPCI-Advanced demonstrates CMS’ continued support of bundled payments on a voluntary basis to encourage both providers and suppliers to coordinate care across multiple settings and meet cost and quality benchmarks. This program is intended as an opportunity for providers to gain experience in care coordination and shared payment structures on their own terms. Details on BPCI-Advanced are described below.

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Judge allows 340B drug payment cuts for 2018 to proceed pending a final ruling

On December 29, 2017, a ruling by a US District Court Judge denied a preliminary injunction to the cuts to Medicare Part B reimbursement rates for 340B drugs pending a final legal decision in a suit filed by a group of about 30 affected hospitals and related associations. The plaintiffs initially filed suit on November 13, with an initial hearing held on December 21 in which the plaintiffs advocated for a preliminary injunction of the rule. In denying of the preliminary injunction, the rate cuts took effect on January 1, 2018.

The suit stems from a provision in the Medicare Outpatient Prospective Payment System (OPPS) final rule issued on November 1, 2017. In the final rule, the Centers for Medicare and Medicaid Service (CMS) announced that it would no longer reimburse certain 340B-purchased drugs at the standard Part B rate of Average Sales Price (ASP) plus 6 percent, instead paying a rate of ASP minus 22.5 percent.

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Proposed rule sets stage to expand availability of association health plans; HHS seeks comment on choice, competition in health care markets

On January 4, 2018, the Department of Labor issued a proposed rule outlining changes to the definition of “employer” under the Employee Retirement Income Security Act (ERISA) in an effort to make association health plans (AHPs) more broadly available to small employers and their employees. In doing so, the proposed rule would lay the groundwork for more small employers and their employees to join AHPs, which generally are considered large group health plans and are not subject to insurance market requirements for small group and non-group health insurance products that were enacted as part of the Affordable Care Act (ACA). Examples of such insurance market reforms include the essential health benefits (EHB) package.

ERISA is the 1974 federal law that generally regulates health coverage offered by large employers and pre-empts state insurance requirements for self-funded coverage.

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CMS finalizes changes to bundled payment models

The Centers for Medicare and Medicaid Services (CMS) on Thursday, November 30, 2017, released a final rule, reducing the number of geographic areas where participation in bundled payments for certain knee and hip replacements would be mandatory and canceling other orthopedic and cardiac bundled payment models that had been slated to begin January 1, 2018. In general, the final rule codifies policies that CMS put forward in a proposed rule in August.

The cancellation or ending of mandatory participation in certain payment models is part of a larger change in thinking at CMS, moving in favor of a more voluntary approach to provider participation.

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