Administration releases final rule to expand short-term limited duration insurance

On August 1, 2018, the Department of the Treasury, the Department of Labor, and the Department of Health and Human Services (“the Departments”) released a final rule amending the definition of short-term, limited duration (STLD) insurance. Notably, the final rule lengthens the maximum period of STLD coverage, allowing policy durations of up to 12 months, and options to renew policies for up to 36 months. This change is a departure from the current 2016 rule that strictly limits STLD coverage to less than three months.

The final rule is set be published in the Federal Register on August 3, 2018, with the rule taking effect on October 4, 2018.

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Hospital Outpatient Prospective Payment System proposed rule moves forward with site neutrality, other changes

On July 25, 2018, the Centers for Medicare and Medicaid Services (CMS) released the proposed rule for the 2019 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System (ASC), laying out proposals aimed at moving forward the Administration’s efforts on site-neutral payment policy as part of an effort to address health care spending growth.

In particular, the proposed rule includes proposed changes to payments for off-campus provider-based departments (PBDs), including a proposal that would reimburse clinic visits at non-excepted PBDs using the Physician Fee Schedule (PFS)-equivalent payment rate rather than the outpatient payment rate. In addition, CMS proposes to allow ASCs to provide a wider array of services, potentially creating a new incentive to deliver more care in non-hospital settings in certain circumstances.

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CMS releases rule clearing way to move forward with risk adjustment payments and collections for 2017 benefit year for ACA exchange plans

On July 24, 2018, the Centers for Medicare and Medicaid Services (CMS) issued an Interim Final Rule that provides additional explanation around the risk adjustment methodology used for qualified health plans (QHPs) offered in Exchanges established under the Affordable Care Act (ACA). CMS is issuing the interim final rule in response to a recent federal court decision; the rule is intended to satisfy an administrative requirement in order for CMS to move forward with risk adjustment collections and payments for the 2017 benefit year.

Importantly, the interim final rule does not make any changes to the previously published Department of Health and Human Services (HHS)-operated risk adjustment methodology for the 2017 benefit year. Instead, the rule provides an additional explanation of the rationale behind the use of statewide average premium and the budget-neutral approach that CMS used to implement the program.

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CMS proposes higher performance standards for year 3 of MACRA Quality Payment Program, significant changes to part B coding requirements

On July 12, 2018, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule detailing the payment updates and policy proposals for the Medicare Part B Physician Fee Schedule (PFS) and the Quality Payment Program (QPP) under the Medicare Access and CHIP Reauthorization Act (MACRA).

As CMS moves forward with implementation of MACRA, the agency proposes raising the performance thresholds under the Merit-based Incentive Payment System (MIPS) for 2019. As a result, a greater percentage of clinicians participating in MIPS would face larger negative payment adjustments in 2021, while a lesser percentage of clinicians would qualify for an additional positive payment adjustment for exceptional performance. The proposed increase in the weight of the Cost measure in MIPS would be an additional challenge for many clinicians, especially as they work to adapt to new performance measures including measures that focus on the efficiency of care delivery in eight episodes of care.

The proposed rule would present unique opportunities for health plans as the All Payer Combination Option begins on January 1, 2019, and CMS opens up the payer-initiated process for commercial and other private payers to submit payment models to CMS for qualification as an Other Payer Advanced APM for the 2020 performance year. In addition, a demonstration project under consideration would present a unique opportunity for Medicare Advantage organizations (MAOs) who incorporate certain risk-based payment arrangements into their contracts with clinicians.

For other health care stakeholders, the higher performance standards under MIPS and the move away from fee-for-service reimbursement will present opportunities to partner with clinicians on efforts to more effectively monitor and improve performance in the Cost and Quality performance categories.

With regard to proposed coding changes under the PFS, health care provider organizations may want to consider an analysis as to how the proposed workflow and payment changes might affect them.

The proposed rule also moves forward with implementation of health care provisions of the Bipartisan Budget Act of 2018 (BBA).

The proposed rule is scheduled to be published in the Federal Register on July 27, 2018. Public comments are due to CMS by September 10, 2018.

Highlights of key provisions of the proposed rule are detailed below.
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MEDICAID NEWS: CMS approves first state Medicaid plan aimed at value-based purchasing of prescription drugs, rejects application for formulary restrictions; court blocks approval of Kentucky Medicaid waiver for work requirements

On June 27, 2018, the Centers for Medicare and Medicaid Services (CMS) approved a Medicaid State Plan Amendment (SPA) allowing Oklahoma to negotiate with drug manufacturers for supplemental rebates under value-based purchasing agreements. Other states have won approval for Supplemental Rebate Agreements (SRAs), but Oklahoma’s SPA is the first specifically to provide for additional rebates to be made to the state if a prescription drug falls short of negotiated clinical benchmarks.

Products covered under an SRA with Oklahoma will have preferred status on the state’s Medicaid formulary and may be placed on lower tiers of the state’s drug listings, granting exemptions to utilization management policies such as prior authorization. The updated agreement applies to drugs dispensed effective January 1, 2019.

Drugs developed and marketed by manufacturers who do not participate in the supplemental rebate program will still be available to Medicaid recipients.
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CMS proposes increase in home health payments for 2019, lays groundwork for implementation of value-based payment provisions

On July 2, 2018, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would increase payments to home health agencies (HHAs) by approximately 2.1% for calendar year 2019 and outlines the implementation of policy changes included in the Bipartisan Budget Act of 2018 (BBA) that are intended to hasten the movement to value-based payments in the home health sector.

The proposed rule will be published in the Federal Register on July 12, 2018. Comments are due by August 31, 2018.

Highlights of key provisions of the proposed rule are summarized below.
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CMS issues request for information on physician self-referral policy

On June 20, 2018, the Centers for Medicare and Medicaid Services (CMS) released a request for information (RFI) seeking public input on any undue regulatory impact or burden stemming from the physician self-referral law, commonly referred to as the Stark Law.

The RFI will be published in the June 25, 2018, Federal Register. Comments are due by August 24, 2018.

Notably, the RFI follows the inclusion of a proposal in the President’s 2019 budget proposal for a broad statutory exception to the physician self-referral law for financial arrangements under alternative payment models (APMs) and a series of industry roundtables on the self-referral law convened by the House Ways and Means Committee.

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The administration’s blueprint to lower drug prices and reduce consumer costs is likely to be a complicated game of Risk

This article originally ran in the Deloitte Center for Health Solution’s Health Care Current. Click here to subscribe.

Remember the game of Risk? My older brother and his friends used to play it for days—much to my annoyance because I didn’t understand it and wasn’t allowed to play with them. Multiple players sit around a board game making strategic moves that are part diplomacy and part conquest. The game is based on some fairly simple rules, but it incorporates a lot of complex interactions. Setting and negotiating drug prices has always reminded me of a complicated board game where multiple players make strategic moves to reach the end of the game—and patients, much like me as a little sister, do not understand and can’t play the game.

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Labor Department issues final rule to expand availability of association health plans

On June 19, 2018, the Department of Labor issued a final rule that changes 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. The final rule is scheduled for publication in the Federal Register on June 21, 2018.

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.

The final rule will make it possible for more small employers and their employees to join AHPs, which generally are considered large group health plans that 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). For example, AHPs would be exempt from requirements for small group and individual market policies to cover the ACA’s 10 essential health benefits.

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