Articles Posted in Health Law

The Centers for Medicare & Medicaid Services (CMS) announced on September 22, 2020 that the Medicare Prior Authorization Model for Repetitive, Scheduled Non-Emergent Ambulance Transport (RSNAT) will be expanded nationwide. Under this system, Medicare pays ambulances for the transport of patients to their scheduled, non-emergency healthcare appointments.

The prior authorization model was launched in 2014 by CMS in select states that displayed a higher utilization of RSNAT services. RSNAT services are essential medical services that have been previously scheduled and require non-emergency ambulance transportation for at least three round trips within ten days, or a minimum of once a week for at least three weeks. These types of ambulance services are covered under Medicare Part B, provided that the services are deemed medically necessary. Under the payment model, the ambulance transportation company must submit a prior authorization request to their Medicare administrative contractor (MAC) on behalf of the beneficiary and include a physician certification statement noting the medical necessity of the service. Once the physician certification statement has been reviewed, the MAC will issue a determination as to whether the beneficiary qualifies for RSNAT.

The purpose of the prior authorization model is to decrease Medicare spending through the reduction of ambulance transportation services that are not covered by Medicare and do not meet coverage standards, without negatively impacting access to care for beneficiaries. The prior authorization model began in 2014 with New Jersey, Pennsylvania, and South Carolina participating, and in 2016 expanded to Delaware, the District of Columbia, Maryland, North Carolina, Virginia, and West Virginia. The model will now be expanded nationwide as a result of the success in those nine states.

On September 13, 2020, President Trump issued an executive order targeting prescription drug process paid by Medicare under Part B and Part D. The order, titled “Executive Order on Lowering Drug Prices by Putting Americans First,” outlines a new policy that Medicare should not pay more for Part B or Part D prescription drugs than the “most-favored-nation price.”

The order defines the “most-favored-nation price” as the lowest price, after adjusting for volume and differences in GDP, for a drug that the manufacturer sells to an Organization for Economic Co-operation and Development (“OECD”) member country with a comparable GDP per capita. For reference, Norway, Austria, and the Netherlands are all OECD member countries with a GDP per capita comparable to the United States.

The order has no immediate effect on prescription drug prices. Change will only occur once regulations have been promulgated, and this process has not yet begun. However, the order directs the Department of Health and Human Services (“HHS”) to “immediately” implement a test payment model. The test model would apply the new policy to certain high-cost prescription drugs and biological products covered by Part B to determine whether paying the “most-favored-nation price” leads to better clinical outcomes and/or cost-saving. The order also directs HHS to develop and implement a similar test payment model for Part D prescription drugs but does not impose a timeline on HHS to do so.

In March 2020, Congress passed the CARES Act to provide relief for Americans during the 2019 Novel Coronavirus (“COVID-19”) pandemic. Part of the CARES Act included an expansion of the Advanced and Accelerated Payments Programs. The Department of Health and Human Services (“HHS”) stated that this expansion would go on for no more than four months, and that the Centers for Medicare and Medicaid Services (“CMS”) would seek recoupment of these accelerated payments after 120-days from issuance of the accelerated payment has passed.

Despite the timeline given by HHS, many hospitals and other healthcare providers have reported that after the 120-day timeline given by HHS had passed, CMS had not yet begun recoupment. Speculation supports the idea that the 120-day deadline is still intact, but that hospitals still have not seen recoupment because of a 30-day turnaround time. However, CMS released guidance that indicated recoupment would be automatic and begin immediately after the 120-day period, heightening confusion among hospitals.

Hospitals and other healthcare providers have been lobbying Congress to forgive these loans, but Congress has yet to come to a resolution. It is possible that CMS is hesitant to begin recoupment while these negotiations are occurring, because if Congress ultimately decides to offer loan forgiveness after CMS has begun recoupment, then CMS would be responsible for repaying the withheld monies.

On September 2, 2020, the Centers for Medicare & Medicaid Services (CMS) finalized fiscal year (FY) 2021 policies in the Inpatient Prospective Payment System (IPPS) for acute care and long-term care hospitals. The rule safeguards access to critical diagnostic technology and medical treatments through increasing technological innovation in the medical industry, easing industry competition, and updating hospital payment policies. IPPS is the Medicare payment system for acute care hospitals. Payments are issued per inpatient or per patient discharge.  Discharge cases are categorized into diagnosis related groups (DRGs) based on similar diagnoses and services provided during the inpatient process. CMS updates the IPPS regulations each year, which allows inpatient hospitals to address quality improvement efforts and maximize cost effectiveness. The updated IPPS final rule takes effect on October 1, 2020 with two very noteworthy changes.

The first important change to the final rule is the switch to a market-based method for weight data collection for calculating Medicare Severity Diagnosis Related Groups (MS-DRGs). Currently, payments for cases under IPPS are calculated by multiplying a hospital’s standardized cost per case, adjusted by geographic location, by the relative weight for the MS-DRG assigned to the case. This cost-based methodology mainly uses hospital charges based on claims and hospital report data. However, recently CMS has acted to reduce Medicare’s use of hospital charge data, due to the thought that gross rates are an inaccurate representation of market costs. In the final rule, MS-DRG weights will instead be based on median payer specific negotiated charges for Medicare Advantage (MA) organizations, collected through Medicare cost reports. This new methodology will be fully implemented by FY 2024. CMS predicts that since hospitals are already obligated to publicly report payer-specific negotiated charges, that calculating and reporting the MA negotiated charge by MS-DRG will be less taxing on hospitals compared to the current method of weight data collection.

The second important change to the final rule is that it encourages the development of medical technology through the creation of several new alternative pathways and payment groups. Under this rule, 13 new technologies that applied for new FY 2021 add-on payments were approved. CMS will continue new technology add-on payments for a portion of the technologies that currently receive the add on payment. Thus, 24 technologies in total will be eligible to receive add-on payments for FY 2021. In addition, this payment expansion includes a new MS-DRG for Chimeric Antigen Receptor (CAR) T-cell Therapy, which will allow for more predictable compensation as well as accurate and efficient billing for hospitals paid through the IPPS when offering these immunotherapy procedures.