Wachler & Associates Health Law Blog

The Centers for Medicare & Medicaid Services (CMS) released the proposed Outpatient Prospective Payment System (OPPS) 2021 Rule on August 4^th 2020. CMS uses the OPPS to decide the amount a hospital will receive for outpatient care for Medicare beneficiaries. Prior to the OPPS, payments for Medicare outpatient services were calculated using hospitals’ costs. Now, using the OPPS, payments for healthcare services are based on certain relative weights, a conversion factor, and geographic and input price adjustments. The goal of the proposed rule is to increase the opportunities for patient choice in healthcare, allow patients to be more active consumers in their healthcare, strengthen the power and success of Medicare, and decrease the burdens on providers. CMS is expected to release the final rule in December. The public comment period ended on October 5^th 2020. The key changes in the proposed rule include:

• Increasing Healthcare Options for Beneficiaries: One important change in the proposed rule is the complete removal of the Inpatient Only list (IPO) by 2024. Traditionally, the procedures and services on this list are only offered in the inpatient setting and thus not paid for under The Outpatient Prospective Payment System. The removal of the IPO would make about 300 services eligible to be paid for by Medicare in hospital outpatient situations. This change would also increase the amount of procedures that would be covered by Medicare in Ambulatory Surgical Centers (ASCs), offering patients more choice in deciding where to receive care and reducing any bias in CMS payment policies that might favor a certain type of care location compared to another.
• 2021 OPPS Payment Methodology: Participating hospitals and certain healthcare providers can purchase specific Medicare covered outpatient medications at discounted prices under Section 340B of the Public Health Service Act (340B). In the 2018 OPPS final rule, a policy was adopted that Medicare would pay an adjusted Average Sale Price (ASP) minus 22.5% for specific drugs that are payable separately or biologicals obtained through 340B. The 2021 OPPS updates would change this to a proposed rate of ASP minus 28.7% for the same drugs and biologicals.

Revocation of Medicare billing privileges means much more than the simple loss of the ability to bill Medicare. It can also lead to loss of staff privileges or to termination by commercial payors, severely impacting the livelihood of a revoked physician or provider. Moreover, the Centers for Medicare & Medicaid Services (CMS) recently expanded its authority to issue more severe reenrollment bars and revocation is often accompanied by placement of the CMS Preclusion List, which further tarnishes a provider’s reputation by labeling them a “bad actor.” Given the devastating impacts that a Medicare revocation can have, CMS and Medicare Administrative Contractors (MACs) give surprisingly little heed to due process in meting out revocations.

In general, the due process clause of the U.S. Constitution prevents the government from interfering with a protected liberty or property interest without due process of law. Federal courts around the country are split on whether healthcare providers have protected interests at stake and what those interests may be. Some courts hold that providers have a property interest in their participation in the Medicare program due to the complex rules and regulations that provide payments to providers. Some courts hold that providers have a liberty interest in their reputation and integrity. Some grounds for revocations, such as “Abuse of Billing Privileges,” may impact a provider’s reputation more than others.

Once a protected interest is established, the essential elements of due process require that a person be given prior notice of an allegation against them and the opportunity to respond before a decision is made. However, CMS and MACs often revoke providers without notifying them of the allegations or giving providers the chance to respond. Instead, many providers receive a letter notifying them that the revocation decision has already been made. Providers then face the difficult task of trying to convince the agency to reverse its own decision, a decision in which the agency has already become entrenched, ­—the very situation due process is meant to prevent.

On September 15, 2020, the Centers for Medicare & Medicaid Services (CMS) announced $75,000,000 in grants for rural providers. Grant recipients would participate in a seven-year payment test model designed to improve healthcare in rural communities. Applications are due February 16, 2021.

The grants are part of the Community Health Access and Rural Transformation (CHART) Model. The CHART Model is part of CMS’s Rethinking Rural Health initiative, which aims to ensure individuals in rural America have access to high quality, affordable health care by offering new and creative payment models.  According to CMS, the CHART Model “will test whether aligned financial incentives, increased operational flexibility, and robust technical support promote rural health care providers’ capacity to implement effective health care delivery system redesign on a broad scale.” The impact of the model will be evaluated by the Center for Medicare & Medicare Innovation (CMMI). The CHART Model contains two tracks: the Community Transformation Track and the Accountable Care Organization (ACO) Transformation Track. The newly announced grants are for the Community Transformation Track only.

Under the Community Transformation Track, CMS anticipates awarding 15 grants in the amount of $5,000,000 each, for a total of $75,000,000. Eligible applicants must serve a county or set of counties that are rural, as defined by the Federal Office of Rural Health Policy, and that includes at least 10,000 Medicare fee-for-service beneficiaries whose primary residence is within the county or set of counties. CMMI encourages applicants to submit letters of intent prior to submitting an application. Letters of intent are due January 18, 2021 and final applications are due February 16, 2021.