Health Law Daily Wrap Up, STRATEGIC PERSPECTIVES—Top 10 stories from July 2017, (Aug. 8, 2017)
Tuesday, August 8, 2017

Health Law Daily Wrap Up, STRATEGIC PERSPECTIVES—Top 10 stories from July 2017, (Aug. 8, 2017)

July kept the Health Law team busy as a rush of Proposed rules hit the Federal Register. CMS proposed updates to payments for home health, Medicaid, outpatient hospitals, ambulatory surgical centers, the physician fee schedule, and the 340B program. The team also took a broader look at health policy, analyzing MACRA, and food safety. Also among this list of 10 stories you may have overlooked (but we hope you didn’t!) is an in-depth compliance White Paper from consulting firm Frost & Sullivan.

HOME HEALTH—PROPOSED RULES: Major changes to home health PPS proposed for 2019

Payment rates under the home health prospective payment system (HH PPS) will increase by 1 percent for calendar year (CY) 2018. In a new Proposed rule, CMS also proposed implementing case-mix methodology refinements and amendments to the Home Health Value-Based Purchasing (HHVBP) model. The rule also outlines a payment system redesign in 2019, which will involve 30-day episodes of care (Proposed rule, 82 FR 35270, July 28, 2017).

MEDICAID PAYMENT—PROPOSED RULES: CMS proposes updated method to calculate ACA-mandated Medicaid allotment reductions

In light of data now available to CMS, the agency has proposed to amend the Disproportionate Share Hospital (DSH) Health Reform Methodology (DHRM) in accordance with the Patient Protection and Affordable Care Act’s amendment to the Social Security Act and is seeking comments on alternative methodologies by August 28, 2017 (Proposed rule, 82 FR 35155, July 28, 2017).

OUTPATIENT HOSPITALS—PROPOSED RULES: Approximate 2 percent increase in OPPS, ASC payments proposed for 2018; cuts to 340B drug discount payments

For calendar year (CY) 2018, CMS is proposing a number of payment rate and policy changes for outpatient hospitals and ambulatory surgical centers (ASCs) aimed at lowering costs, reducing reporting and monitoring burdens on providers, enhancing the patient-doctor relationship, and improving delivery of care, according to the CY 2018 Proposed rule and corresponding fact sheet. The proposed rule provides payment rate and quality reporting changes for CY 2018 for the Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System and changes to OPPS hospital payments under the 340B drug discount program (Proposed rule, 82 FR 33558, July 20, 2017).

PHYSICIAN FEE SCHEDULE—PROPOSED RULES: CMS plans changes to physician fee schedule

CMS was unable to identify enough reductions in misvalued codes to reach the 0.5 percent savings it was aiming for in its update to the physician fee schedule (PFS) for 2018, and proposed a conversion factor of $35.99, a 0.31 percent increase over 2017. In a new Proposed rule, CMS addressed the conversion factor, misvalued code target, PFS payment rates to off-campus provider-based departments (PBDs), and telehealth services. The agency also proposed to expand the Medicare Diabetes Prevention Program (MDPP), which is being tested through the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) Innovation Center. The Proposed rule also included a Request for Information (RFI) seeking feedback on Medicare as part of what the agency called "a national conversation about improving the healthcare delivery system." Comments on the Proposed rule are due by September 11, 2017 (Proposed rule, 82 FR 33950, July 21, 2017).

STRATEGIC PERSPECTIVES: Experts weigh in on MACRA’s first year and future

CMS is treating 2017 as a "transition" year for the Quality Payment Program’s (QPP) Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (Advanced APMs), which makes changes to Medicare Part B payments to providers. According to industry experts, the transition is going well, although providers are facing some concerns about adopting necessary technology and losing valuable one-on-one time with patients. CMS seems to be aware of these concerns and is trying to address them through proposed updates to the Quality Payment Program for calendar year 2018 that include a large increase to the low-volume threshold and the introduction of virtual groups and the facility-based measurement option.

This Strategic Perspective provides experts’ views of how the first year of the QPP is going for providers and includes insight into CMS’ new Proposed rule (82 FR 30010, June 30, 2017) for the QPP in 2018 (see Halfway through QPP ‘transition year,’ CMS proposes substantial changes, June 21, 2017).

STRATEGIC PERSPECTIVES: Will food safety take a backseat under Trump Administration?

On May 23, 2017, the White House unveiled its inaugural budget for fiscal year (FY) 2018 titled "A New Foundation for American Greatness" that would seek to reduce overall spending by $3.6 trillion over the next 10 years (see $3.6T in cuts spells R-E-S-P-E-C-T in Trump budget, May 23, 2017). The proposed budget also claims to eliminate federal deficits in 10 years and would also keep the President’s campaign promises of delivering tax cuts while maintaining federal revenue levels.

Although the proposed budget would slash appropriations for the FDA, the White House proposes to make up those budget cuts through fees paid by the industry. However, with intense opposition from businesses, congressional leaders have been unwilling to consider adding new fees, leaving that part of the proposal unlikely to pass. This Strategic Perspective will provide an overview of the implementing regulations under FSMA, the national interests at stake, and the impact of the Trump Administration on food safety.

WHITE PAPERS: The increasing challenge of managing regulatory and compliance risk

The health care industry is heavily regulated at the federal, state, and local levels. The challenge to professionals involved in the regulatory and compliance process is that the element of change is always present; yet in today’s environment the stakes have risen, given the combination of internal and external factors driving change for most health care providers. A large segment of the regulatory maze involves the submission of specific information that is crucial to successful reimbursement by the payer to the provider for medical services that have been delivered to patients, some of whom have limited coverage.

To download the Frost & Sullivan white paper, "The Increasing Challenge of Managing Regulatory and Compliance Risk," click here.

DISPROPORTIONATE SHARE HOSPITALS—D.C. Cir.: Change in reimbursement adjustment formula without notice and comment violates Medicare

The United States Court of Appeals for the District of Columbia Circuit reversed the ruling of the District Court for the District of Columbia in a matter brought by several hospitals challenging the formula used by HHS to calculate Medicare reimbursement adjustments for fiscal year 2012. Specifically, the hospitals argued that HHS violated the Medicare Act when it changed the reimbursement adjustment formula without providing the public with notice and an opportunity to comment. The district court granted summary judgment to HHS, ruling the agency did not violate the Medicare Act’s procedural requirements. The district court reasoned that the Medicare Act incorporates the Administrative Procedure Act’s (APA) exception to notice-and-comment rulemaking for interpretive rules and that HHS’s issuance of the reimbursement adjustment formula constitutes an interpretive rule. The appeal court disagreed, concluding that HHS did, in fact, violate the Medicare Act when it changed its reimbursement adjustment formula without providing notice and an opportunity for comment (Allina Health Services v. Price, July 25, 2017, Kavanaugh, B.).

ADVERTISING (FOOD, DRUG & MEDICAL DEVICES)—E.D. Wis.: Food company prohibited from negatively characterizing genetically engineered substances

A federal district court in Wisconsin modified a previous injunction it had issued against Arla Foods (Arla), which had prohibited the company from issuing certain advertising related to a genetically engineered substance, recombinant bovine somatotropin (rBST), designed to prolong the lactation period of dairy cows and increase milk production. The court emphasized that its modification did not change the original injunction, but rather clarified that the food company was prohibited only from making certain negative claims concerning the genetically engineered substance while the case was pending (Eli Lilly and Company v. Arla Foods Inc., July 18, 2017, Griesbach, W.).

ADMINISTRATION OF FDC ACT—OTHER AGENCY DOCUMENTS: FDA Work Plan looks to advance development and review with new funds

As required by the 21st Century Cures Act (Cures Act) (P.L. 114-255), the FDA submitted a Work Plan to Congress detailing the agency’s intended actions to meet priorities as established by the law. The Cures Act, enacted into law on December 13, 2016, primarily affects activities of the HHS and FDA (see 21st Century Cures Act becomes law, December 13, 2016; 21st Century Cures Act headed for President’s desk, December 8, 2016). The Work Plan describes activities that are intended to meet the Cures Act requirements in areas that are a high priority for the Innovation Account, which under the Cures Act was an infusion of $500 million in agency funding. The funds would be used to hire more staff to review drug applications, as well as for advancement of medical product development and review. According to the FDA, the Work Plan helps chart a path for advancing medical product development and reviews and help bring innovative new therapies and products to patients and health care providers in a more timely and efficient manner (FDA Work Plan, June 6, 2017).

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