Washington Watch

Carter L. Alleman, J.D.

CMS Finalizes Overhauled Policy on Global Codes Data Collection

The Centers for Medicare & Medicaid Services (CMS) released an improved policy November 2 on the collection of data that will eventually be used to revalue global codes. Under the final rule, physicians in large practices who perform 10- and 90-day global services in a representative sample of nine states will be required to report Current Procedural Terminology (CPT) code 99024 to report data on the number of postoperative visits they provide. CMS is limiting reporting to codes that the agency has determined are high-volume or high-expenditure Medicare services. This reporting requirement is scheduled to take effect July 1, 2017.

CMS is implementing a requirement for reporting on services that are furnished by more than 100 practitioners and are either furnished more than 10,000 times or have allowed charges of more than $10 million annually as recommended by the RUC and many other commenters. Under this policy, CMS would collect data on about 260 codes that describe approximately 87 percent of all furnished 10- and 90-day global services and about 77 percent of all Medicare expenditures for 10- and 90-day global services under the PFS. Given that this data would provide information on the codes describing the vast majority of 10- and 90-day global services and expenditures, it will provide significant data for valuation.

CMS will require reporting that only applies to practitioners in selected states. In addition, those practicing only in small practices are excluded from required reporting. Those not required to report can do so voluntarily and we encourage them to do so. Those states are Florida, Kentucky, Louisiana, Nevada, New Jersey, North Dakota, Ohio, Oregon, and Rhode Island.

CMS is not implementing the statutory provision that authorizes a 5 percent withhold of payment for the global services until claims are filed for the post-operative care, if required.

This final policy is a complete overhaul of the proposed rule released in July, which would have required that all physicians in all states report data on all 10- and 90-day services that they provide. Physicians would have been required to report their pre- and postoperative care in 10-minute increments—an untenable requirement that is not aligned with clinician workflow—beginning January 1.

The final rule is available online; the section related to global codes begins on page 149.

FIRST Trial: Residents with More Patient Responsibility Prefer Flexible Work Hours

U.S. general surgery residents prefer work hour policies that allow them the flexibility to put in more time in the hospital when needed to provide patient care over more restrictive work schedules, according to results from a national survey conducted as part of the Flexibility in Duty Hour Requirements for Surgical Trainees (FIRST) Trial. The new analysis—which is derived from a survey of more than 95 percent of the 3,700 surgeons in training who participated in the FIRST Trial—found that 86 percent of surgical residents preferred flexible duty-hour policies over regulated duty hours or had no preference.

The FIRST Trial was the first national randomized trial to compare standard surgical resident duty-hour requirements with more flexible policies. During the FIRST Trial, 59 general surgery residency programs adhered to standard duty hour policies, which the Accreditation Council for Graduate Medical Education (ACGME) established in 2003 and 2011. The other 58 programs tested a flexible policy that waived certain ACGME rules on maximum shift lengths and mandatory time off between shifts to allow the residents some flexibility.

Findings from the FIRST Trial published earlier this year in the New England Journal of Medicine demonstrated that easing current restrictions on surgical residents’ schedules to allow for some flexibility did not have an adverse effect on general surgery patient outcomes or on overall resident well-being. In fact, residents in the flexible arm of the study noted several benefits with respect to patient care, continuity of care, and resident training.

MedPAC Meets to Discuss Provider Consolidation, Open Payments

During the meeting in Washington, DC, the commission reviewed the role of CMS in provider consolidation and the implications of different types of consolidation for the Medicare program and private payors. MedPAC staff indicated that vertical financial integration, through which hospital systems acquire physician practices, has caused an increase in Medicare spending due to the higher costs associated with providing services typically furnished in physician offices in hospital outpatient settings. Commissioners reiterated their standing recommendation to limit Medicare facility fees and equalize rates for certain services across all sites of care.

MedPAC commissioners also discussed findings from the Open Payments Program, through which CMS collects data from drug and device manufacturers and group purchasing organizations (GPOs) on their financial relationships with physicians and teaching hospitals. MedPAC staff provided an analysis of Open Payments data that CMS released from August 2013 to December 2015. In 2015, manufacturers and GPOs made nearly $7.5 billion in payments for research, royalties, consulting, promotional speeches, and other activities to more than 610,000 physicians and 1,100 teaching hospitals. Open Payments data suggested that these payments are skewed toward the top 5 percent of physicians, who accounted for 86 percent of all general payments made by manufacturers and GPOs. MedPAC recommended that research be conducted to examine the relationship between payments from manufacturers and physicians’ use of certain drugs and devices.

Health Policy Issues in the 115th Congress

A quick look at major health issues facing the Congress.

FDA User Fees

The issue: Congress in 1992 enacted the prescription drug user fee system. Under the program, the pharmaceutical industry and the Food and Drug Administration negotiate an agreement which sets a certain amount that pharmaceutical companies pay each year, known as a user fee, to fund certain initiatives at the agency. That agreement typically is reauthorized every five years and has grown to include the medical device and generic drug industries, among others. User fees now account for almost half of the FDA’s total budget. Next year, Congress will be tasked with reauthorizing the agreements before the current legislation expires at the end of September 2017.

What to expect: House Energy and Commerce Chairman Fred Upton hopes that his legacy legislation, a package of biomedical innovation bills known as 21st Century Cures, will be signed into law in 2016. If the Michigan Republican is unable to make that happen, many of the provisions included in that package are expected to be considered for possible inclusion in the pending user fee reauthorization. The Cures bill included several changes to the pre-market review process for drugs and medical devices. Those measures have bipartisan support and could be included in the user fee reauthorizations next year.

Another issue that potentially could be addressed in next year’s legislation is the rising cost of prescription drugs. The issue was discussed widely on the presidential campaign trail by candidates from both parties and the controversy grew in recent months after Mylan N.V. increased the cost of its EpiPen device, which provides emergency medication for severe allergic reactions.

Health Care Law

The issue: Republicans are likely to make an effort to repeal President Barack Obama's signature domestic achievement. The marketplace coverage created by the law already was facing mounting challenges. Premiums for people who buy their health insurance on HealthCare.gov are ratcheting up by an average 25 percent for benchmark plans. Some insurance companies, citing financial losses, are backing out of the marketplaces. Some are even going bankrupt. However, the law has provided coverage through the exchanges, Medicaid and other programs to roughly 20 million people, according to the Obama administration.

What to expect: The politics surrounding the 2010 health law run deep. President-elect Donald J. Trump earlier this month called for Republicans to act and pledged to call a "special session" to push repeal. If Republicans pass a budget resolution, they can use special procedures to repeal parts of the law through the so-called reconciliation process, which only requires 51 Senate votes rather than 60. Earlier this year, Republicans used reconciliation to clear a measure that would have removed the penalties used to enforce the mandates that most individuals have health coverage and large employers offer it to their workers. It also would have repealed in 2018 the law’s Medicaid expansion and its subsidies to help low- and middle-income individuals buy health coverage through the new insurance exchanges. Obama vetoed it.

Children's Health Insurance

The issue: Funding for the popular Children's Health Insurance Program will expire at the end of September 2017, making a reauthorization bill a must-pass agenda item for the 115th Congress. Lawmakers could pass a simple two-year extension, although advocates and Democrats would prefer a longer approval for the bipartisan program. That will complicate the debate: the program's entire legislative authority will run out in 2019, as will requirements that prevent states from making it harder for people to enroll in the program. The levels at which it is funded will also be a hot-button issue because the 2010 health law provided states with a 23 percentage point boost. Some fiscal conservatives would like to lower spending, but states that rely on the funds will push to keep them. As they have in years past, advocates are pushing for Congress to extend that funding in the spring to give state legislatures that adjourn early in the year time to set their health budgets.

What to expect: The CHIP program is extremely popular politically, but that hasn't stopped it from becoming controversial in recent years. Congress may try to begin debate on the program early in the year in an effort to help state officials plan ahead. But the fight is likely to be partisan. In 2015, the last time the program needed to be authorized, Republicans sought a reduction in the funding levels and a repeal of the provisions related to state eligibility requirements. Democrats, meanwhile, held hostage a separate bipartisan measure on Medicare reimbursements in an unsuccessful attempt to force Republicans to fund the program for four years instead of two.

Staffing, IT Systems Top Concerns for Medicaid Directors

A majority of the country's Medicaid directors said their biggest challenges are related to staffing and technology infrastructure, according to a survey by an advocacy group for the officials. It is a shift from the past several years, when directors were more likely to cite the implementation of the 2010 health overhaul a top challenge.

The results also underscore other ongoing changes in the Medicaid program, which has grown to cover 73.1 million Americans. More Medicaid directors said their priority is so-called payment reform, an industry-wide focus on transitioning health care away from fee-for-service payments, than any other topic. Directors also highlighted a new focus on IT systems and on behavioral health. About half of the directors, meanwhile, cited their administrative budget as a key challenge.

Seniors Opt Out of Full Coverage, Lower Medicare Plans' Profits

Medicare may be shortchanging insurers because its calculations ignore the growing number of wealthy and working senior citizens who chose not to fully enroll in the giant health program. They estimated that insurers would gain $20 billion over a decade if Medicare rules were to better reflect the number of people opting out.

MedPAC is working on its 2017 suggestions to Congress regarding the continual financial battles between the insurance industry and Medicare. MedPAC also revisited concerns that some insurers may be identifying customers in their
Medicare Advantage plans as sicker than they are to secure extra pay. Medicare sets payments for the Advantage plans by looking at how much the traditional fee-for-service program spends. These calculations factor in spending in both major components of Medicare: the Part A section that covers hospital care and Part B that covers more routine care such as visits to doctors.

A small but growing number of people opt out of Medicare Part B while remaining in Part A, MedPAC staff said Friday. This group grew to 12.4 percent of Medicare’s population in 2015 from 10.2 percent in 2009. People who opt out of Part B also appear to be in better general health, reducing the hospital bills for Part A as well. This may cause further distortion in setting reimbursements for Advantage plans. Sticker shock about Medicare Part B premiums appears to be driving the decision to opt out in many cases. Some people do decline Part B because they continue working and thus have health insurance provided by their insurers. More often, though, people might make this call because they cannot afford Part B premiums or decide that that are a bad deal.

CMS Timelime for Off-Campus Doctor Pay Rule Raises Alarms

The Centers for Medicare and Medicaid Services said it will create special rates for newer hospital-owned practices by Jan. 1 through an administrative fast-track proposal, known as an interim final rule. This is intended to help hospitals determine how to bill for these kinds of services, which they previously billed under the more lucrative hospital outpatient rule. In many cases, the pay for newer hospital services would be set under these transition rates at about half of the former outpatient reimbursement, CMS said. CMS attached the interim rule to the final rule on 2017 outpatient payment.

The budget law mandate does not apply to hospital-owned practices already in operation at the time the measure took effect in November 2015. They can continue to bill at the higher outpatient rates rather than the lower reimbursements set in the physician fee rule.