Almost two years after the passage of the Patient Protection and Affordable Care Act (“ACA”), the Centers for Medicare & Medicaid Services (“CMS”) released a proposed rule regarding overpayments to providers and suppliers, as provided for under Section 6402(a) of the ACA. To date, regulators, courts, clients, and members of the bar have interpreted the requirements of Section 6402(a) in various ways. The proposed rule provides CMS's view on this matter, and, given that CMS is proposing a number of potentially onerous requirements with regard to investigating, reporting, and returning overpayments, stakeholders should consider submitting comments. This health reform alert provides an overview of CMS's proposed rule and its potentially burdensome implications.
Medicare Providers and Suppliers Continue in the Spotlight: Medicare Providers and Suppliers Continue in the Spotlight
Expansion of the DMEPOS Competitive Bidding Program; Legislative Inquiry Related to Fraud and Abuse Enforcement Actions; and Automated Pre-Enrollment Provider Screening
In order to be prepared for upcoming changes and to respond to new initiatives, providers and suppliers participating in Medicare must be aware of recent Congressional activity that would hold the federal government accountable for its intended enforcement efforts designed to curb health care fraud, waste, and abuse, as well as an effort by the Centers for Medicare & Medicaid Services (“CMS”) to implement automated pre-enrollment provider and supplier screening in January 2012. One example of the pressures that providers and suppliers face in this enhanced regulatory and enforcement climate is the upcoming expansion of the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (“DMEPOS”) Competitive Bidding Program, which is targeted to launch in July 2013 and for which the Round 2 bidding timeline was announced on November 30, 2011.
As the “Three Tenors” (Chairmen Waxman, Miller and Rangel) struggle to finance the access enhancements that are central to the President’s health reform aspirations, the need for meaningful payment reform continues to challenge. This week House Speaker Nancy Pelosi urged the Chairmen to sharpen their pencils in this regard. Moreover, in a letter to the Speaker and Majority Leader Steny Hoyer, the fiscally-conservative “Blue Dog” coalition of House Democrats has now said that the current drafts fail to include sufficient structural reforms likely to succeed in lowering costs and incenting “value” (in purchasing).
These House members would like to see strenuous efforts to capture the savings promised by the literature pointing out the significant disparities in regional health care practice/resource consumption patterns. To that end, the “Blue Dogs” and many analysts are placing a great deal of hope in the ability of payment incentives to trigger the ordering of only appropriate (cost effective) diagnostic tests and pharmaceuticals and the implementation of “evidence based” care paths.
Intuitively there is great merit to the theme. However, testing of the concepts has been limited to date. Therefore, there is yet little science from which to judge the necessary “octane” of the incentives. Moreover, the amount of change to be engendered by Medicare payment reform is unknown—hence some of the enthusiasm for a public plan that might adopt payment methodologies that echo those of a reformed Medicare fee-for-service system thus putting more strength behind the effort the “bend the curve” of growth in health care expenditures. Finally, policy makers do not how much reinforcing discernment should or could be created among beneficiaries particularly during the statistically costly “last year of life.”
While some provider systems appropriately believe they are “ready, willing and able” to operate under new payment methodologies, most are not. Moreover, even provider systems that have a high degree of clinical integration, IT infrastructure and physician leadership, face significant challenges in operating during a transition stage where some payor customers will strongly reward utilization efficiencies and others will retain payment methodologies that continue to implicitly reward providing services without regard to clinical appropriateness. (These providers are likely to capture the empathy of lawyers like me who also are increasingly operated under mixed payment methodologies.)
Health care investors face concomitant uncertainties. How will the companies they are backing fare in an era where providers are incentivized to order fewer tests, labs and scans? Will the target’s product line continue to do well among providers who are scrutinizing costs to earn incentive payments? Similarly, are the company’s products on the short list for comparative effectiveness review and, if so, what are the likely results and how will such review affect provider system choices? Therefore, as we watch the Congress adopt payment policy reform, we open up interesting new forecasting questions with regard to the nature of such reform, its pace and its impacts on market actors.