Health Reform WK-EDGE Qualified entities, payment systems, calorie labeling: agencies’ ACA focus for Q3 2016
Friday, October 14, 2016

Qualified entities, payment systems, calorie labeling: agencies’ ACA focus for Q3 2016

By Sheila Lynch-Afryl, J.D., M.A.

Since June 2016, CMS and the FDA have published four Final rules implementing, in part, the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). This Strategic Perspective provides a brief retrospective of these Final rules. Among these third-quarter Final rules implementing the ACA were a modification to the use of Medicare data by qualified entities, an extension of the compliance date for the calorie-labeling rule for vending machines, and updates to provider payment systems.

Use of Medicare data by qualified entities

Section 10332 of the requires the HHS Secretary to make available to qualified entities standardized extracts of Medicare Part A and Part B claims data and Part D drug data. Under the original statutory provisions, the Medicare claims data had to be combined with other non-Medicare claims data and could be used only to evaluate the performance of providers and suppliers. Section 105 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (P.L. 114-10) expanded the program, effective July 1, 2016. Under MACRA, qualified entities are allowed to use the combined data and information derived from these evaluations to conduct nonpublic analyses and provide or sell these analyses to authorized users for nonpublic use in accordance with the program requirements and other applicable laws.

In July, CMS released a Final rule (81 FR 44456, July 7, 2016) implementing MACRA (see Qualified entity rule finalized privacy concerns mandate de-identification process, July 6, 2016). New 42 C.F.R. Sec. 401.716 allows a qualified entity, subject to certain limitations, to use combined data to create nonpublic analyses in addition to performance measures and provide or sell these nonpublic analyses to authorized users. The Final rule also requires a qualified entity and its contractors (including business associates) to execute a Data Use Agreement with CMS that requires the qualified entity to maintain privacy and security protocols.

Notice requirements. Under the Final rule, a qualified entity is required to notify a provider or supplier that nonpublic analyses that individually identify the provider or supplier are going to be released to an authorized user. Qualified entities also must provide annual reports to CMS containing information on data and nonpublic analyses provided or sold to authorized users.

Qualified clinical data registries. In light of existing research request processes and procedures, CMS initially proposed not to adopt any new policies or procedures regarding qualified clinical data registries’ access to Medicare claims data for quality improvement or patient safety analyses. In response to comments, CMS modified the regulations to allow qualified clinical data registries to serve as quasi-qualified entities. The Physician Clinical Registry Coalition argued, however, that treating qualified clinical data registries as quasi-qualified entities will not provide the type of access contemplated by MACRA Sec. 105(b). The coalition expressed concern that it would be "very difficult" for qualified clinical data registries to qualify for quasi-qualified entity status.

Extension of compliance date for calorie labeling rule

Pursuant to Section 4205 of the ACA, vending machine operators who own or operate 20 or more vending machines are required to provide calorie declarations for certain articles of food sold from vending machines. The FDA implemented Section 4205 with a December 2014 Final rule (79 FR 71259, December 1, 2014).

After the publication of the Final rule, trade organizations expressed to the FDA that the Final rule’s type size requirement posed significant technical challenges to the packaged food industry. In the Final rule, 81 FR 50303, August 1, 2016, the FDA extended the compliance date for type size front-of-pack labeling requirements (21 C.F.R. Sec. 101.8(b)(2)) and calorie disclosure requirements (21 C.F.R. Sec. 101.8(c)(2)) for certain gums, mints, and roll candy products in glass-front machines from December 1, 2016, to July 26, 2018, to allow the agency to consider issues relating to signage and vending machine design (see Front-of-package calorie declaration buys time for vending machine companies, August 3, 2016).

IPPS Final rule

The Final rule for the hospital inpatient prospective payment system (IPPS) (80 FR 56762, August 22, 2016) implemented a number of ACA requirements (see 15 percent payment cut overshadows end of Two-Midnight adjustment, August 24, 2016).

Productivity adjustment. For fiscal year (FY) 2017, consistent with Soc. Sec. Act Section 1886(b)(3)(B), as amended by ACA Sections 3401(a) and 10319(a), the applicable percentage change for updating the standardized amount for all hospitals in all areas is the percentage increase in the market basket index for prospective payment hospitals, less a multifactor productivity adjustment and less 0.75 percentage point.

DSH adjustment. Section 3133 of the ACA modified the methodology for computing the Medicare disproportionate share hospital (DSH) payment adjustment beginning in FY 2014. Hospitals that qualify for DSH payments for FY 2014 and later years will receive an additional amount equal to the product of three factors.

Teaching hospital closure. Section 5506 of the ACA required the Secretary to establish a process under which, in the event a teaching hospital closes, the Secretary will permanently increase the full-time equivalent (FTE) resident caps for hospitals that meet certain criteria up to the number of the closed hospital’s FTE resident caps. Section 5506(d) requires the Secretary, when awarding slots under section 5506, to consider any temporary cap adjustment to a hospital’s FTE cap under 42 C.F.R. Sec. 413.79(h) to ensure no duplication of FTE slots. Special rules apply to residents training in rural track programs.

Long-term care hospitals. CMS may reduce the payments to a long-term care hospital (LTCH) if more than 25 percent of its Medicare patients were transferred from hospitals co-located with the LTCH or a satellite facility. Section 3106 of the ACA extended a moratorium on the full implementation of this rule, and further legislation extended it until October 1, 2017.

Pursuant to ACA Section 3004(a), which established the LTCH quality reporting program (QRP), an LTCH must submit data on quality measures or have its annual update to the standard federal rate reduced by 2 percentage points.

Inpatient rehabilitation facilities PPS Final rule

Pursuant to Section 3004(b) of the ACA, which established the inpatient rehabilitation facility (IRF) QRP, an IRF must submit data on quality measures or have its annual update to the standard federal rate reduced by 2 percentage points. When certain extraordinary circumstances exist beyond the control of an IRF, the IRF may, within 90 days of the date that the extraordinary circumstances occurred, request exceptions or extensions to the quality data reporting requirements.

In the FY 2016 IRF prospective payment system (PPS) Final rule (81 FR 52056, August 5, 2016), CMS added 42 C.F.R. Sec. 412.634(f), which provides that, beginning with FY 2016, IRFs must meet or exceed two separate data completeness thresholds to avoid receiving the reduction: one threshold set at 95 percent for completion of quality measures data collected using the IRF Patient Assessment Instrument submitted through the Quality Improvement Evaluation System and a second threshold set at 100 percent for quality measures data collected and submitted using the Centers for Disease Control and Prevention’s National Healthcare Safety Network. These thresholds apply to all measures adopted into the IRF QRP (see $145M payment increase for rehab facilities in 2017, August 10, 2016).


In the third quarter, CMS and the FDA issued four Final rules making regulatory changes that implemented the ACA. In the fourth quarter, CMS will release the 2017 physician fee schedule Final rule and the Final rules for the end-stage renal disease, outpatient hospital, and home health PPSs for FY 2017, all of which implement the ACA in part.

MainStory: StrategicPerspectives NewsFeed InpatientFacilityNews MedicarePartANews QualityNews ProviderPaymentNews

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