The monthly healthcare wrap-up: June 2018

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HHS aims to bring value-based purchasing to SNFs and post-acute care providers

Earlier in the month, Department of Health and Human Services (HHS) Secretary Alex Azar spoke to the National Center for Assisted Living (NCAL) of the American Health Care Association (AHCA) regarding the Trump administration’s effort to bring value-based purchasing to skilled nursing facilities (SNFs).

  • Secretary Azar emphasized that value-based purchasing can help SNFs and post-acute care providers cut costs by facilitating appropriate resource utilization and increased care coordination
  • One core element of this effort is the Patient Driven Payment Model (PDPM), proposed by the Centers for Medicare & Medicaid Services (CMS) this spring:
    • Rather than calculating reimbursement based on volume of services provided, this prospective payment system would reimburse SNFs according to patient conditions
    • If implemented, the PDPM would also increase payment to nursing homes by roughly $850 million
    • It would replace the Resident Classification System, Version I (RCS-1), which originally tried to steer SNFs away from fee-for-service payments
  • Secretary Azar also explained value-based purchasing could help direct post-acute care patients to the appropriate care setting and reduce hospital readmissions, which cost Medicare about $26 billion per year, according to data from the Center for Health Information and Analysis

CMS exceeds 2017 MIPS participation goal with 91 percent of eligible clinicians participating

CMS announced it exceeded its 90 percent participation goal for 2017 Merit-Based Incentive Payment System (MIPS) reporting. “What makes these numbers most exciting is the concerted efforts by clinicians, professional associations, and many others to ensure high quality care and improved outcomes for patients,” wrote CMS Administrator Seema Verma in the official announcement.

  • The agency also announced that 98 percent of accountable care organizations (ACOs) and 94 percent of rural clinicians participated in 2017 MIPS reporting
  • To meet the MIPS participation requirements and avoid a penalty, clinicians had to submit data on one quality measure, Improvement Activity, or four or five Advancing Care Information measures
  • Administrator Verma indicated the agency plans to decrease the program’s regulatory burden as well as the number of Medicare clinicians required to participate
  • The final 2018 Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) implementation rule raised the MIPS participation threshold; the agency will exclude clinicians if they have $90,000 or less in Medicare Part B allowed charges (up from $30,000 or less previously), or if the clinicians treat 200 or less Part B beneficiaries (up from 100 beneficiaries previously)

HHS made more than $90 billion in improper payments in FY 2017, estimates suggest

A recent report by the Government Accountability Office (GAO) estimated that HHS made $90.1 billion in improper Medicare and Medicaid payments in FY 2017. GAO also, in a separate report, analyzed HHS’ Payment Error Rate Measurement (PERM) for Medicaid managed care, finding that Medicaid paid half of its total federal expenditures ($171 billion) to managed care organizations in FY 2017.

  • GAO’s first report estimated HHS made $36.73 billion in improper payments for Medicaid, $36.2 billion in improper payments for Medicare fee-for-service (FFS) and $14.35 billion in improper payments for Medicare Advantage
  • Rather than using a baseline statistical analysis on an annual basis to determine improper payments, the department uses internal methods that are unable to identify all the risk factors for improper and under-documented payment claims
  • The Office of Management and Budget (OMB) said the department’s inspector general should address concerns about potential or identified improper payments
  • CMS estimated that Medicaid made roughly $500 million in improper payments to Medicaid managed care organizations, resulting in a 0.3 percent improper payment rate for Medicaid managed care in FY 2017

Trend continues of private equity firms acquiring healthcare companies

A report by Bain & Co. found that the value of private equity agreements in healthcare increased 17 percent globally, from $36.4 billion in 2016 to $42.6 billion in 2017. The number of deals involving private equity firms and healthcare companies increased by about 29 percent as well, from 206 in 2016 to 265 in 2017.

  • Private equity professionals note that specialty services and fragmented hospital-based specialties, such as anesthesiology and radiology, are attractive targets because they receive higher reimbursements, and patients with certain conditions regularly seek their services
  • Private equity firms often consolidate specialty markets in certain regions to reduce administrative costs and streamline marketing, sales operations and IT tasks
  • The American Medical Association (AMA) recently agreed to evaluate the effects of  corporate investors having a controlling or majority stake in companies that manage physician practices

MedPAC releases its annual June report to Congress, proposes payment cuts

The Medicare Payment Advisory Commission (MedPAC) released its annual June report to Congress, which proposed cutting payments for freestanding emergency departments (EDs) and medical devices. The report also found that CMS’ Hospital Readmissions Reduction Program (HRRP) significantly reduced hospital readmission rates and generated roughly $2 billion in Medicare savings annually.

The commission, made up of 17 health policy experts and providers, proposed several changes in this report. Below are a few highlights:

  • Encourage Medicare FFS to prevent beneficiaries from using low-value healthcare services by raising cost-sharing for low-value services, expanding the use of prior authorization and aligning comparative clinical effectiveness and cost-effectiveness information with FFS coverage and payment policies, among other methods
  • Rebalance Medicare’s physician fee schedule by increasing payment rates for evaluation and management (E&M) services by 10 percent while decreasing payment rates for other services—such as imaging and tests—by 3.8 percent. This would result in an increase of annual spending for ambulatory E&M services by $2.4 billion
  • Implement a unified post-acute care (PAC) prospective payment system (PPS) in 2021 (over a three-year transition period) that spans SNFs, home health agencies (HHAs), inpatient rehabilitation facilities (IRFs) and long-term care hospitals (LTCHs)

Review the full report and its proposals here >

CMS received suggestion to expand the Certified Community Behavioral Health Clinic Program

Earlier this month, the National Council for Behavioral Health suggested the government expand the Certified Community Behavioral Health Clinic Program, a two-year pilot program currently in use by eight states.

  • The program established intensive clinics for individuals with untreated, severe mental illness or addiction, and uses standardized quality metrics across states
  • This is one element of a larger push for behavioral health providers to adopt value-based purchasing by using standard metrics to assess outcomes and implementing electronic health records platforms to increase data sharing

Senate committee meets to lower healthcare costs

The Senate Health, Education, Labor, and Pensions (HELP) Committee planned to meet at the end of the month to discuss “How to Reduce Health Care Costs: Understanding the Cost of Health Care in America.”

  • The committee plans to better understand healthcare spending in the U.S., including who is spending the most money, what they are spending it on, and to which sectors the most money is going
  • The HELP Committee will hear from healthcare finance advisors and representatives of think tanks that have studied and documented healthcare spending in America

We will keep you informed of any major decisions that result from this session in our next monthly healthcare wrap-up.


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